The Rising Threat of AI Disinformation: How Fake News Could Trigger Bank Runs

A recent British study underscores the growing possibility of AI-generated fake news causing bank runs, pushing institutions to improve their monitoring systems. The study, undertaken by Say No to Disinfo and Fenimore Harper, warns that generative AI can generate false reports about bank security, which can fast spread via social media marketing and influence customer behavior.

Concerns over AI-driven disinformation stem from the collapse of Silicon Valley Bank in 2023, when $42 billion was withdrawn in a single day due to social media-fueled panic. The G20 Financial Stability Board has also cautioned that AI-generated material could cause financial crises, such as market collapses and mass withdrawals.

The study tested AI-generated disinformation on UK bank customers and discovered that 33% were "extremely likely" to move their money, while 27% were "somewhat likely" after viewing deceptive content. Researchers predict that spending £10 on social media advertising that pump up such information may result in £1 million in withdrawals, highlighting the massive impact of AI-powered fake news.

To reduce risks, experts advocate real-time monitoring of social media and connection with withdrawal tracking systems. Revolut, the a UK-based fintech firm, currently uses similar techniques, but there are rising calls for social media platforms to take responsibility for combating disinformation.

While banks continue to be bullish about the benefits of AI, regulatory agencies are growing increasingly concerned about the potential risks to financial stability. The study's release coincides with a global movement toward AI use, emphasizing the critical need to address its darker consequences in the financial sector.

This article is based on the information from Reuters