As artificial intelligence (AI) gains increasing attention in the wealth and banking sector, regulation framework talks continued on Thursday at the UK government’s AI Safety Summit at Bletchley Park, with the signing of an international declaration, as well as a multilateral agreement.

UK Prime Minister Rishi Sunak on Thursday said that the UK-led AI Safety Summit had reached a “landmark agreement” with like-minded companies and governments on safety testing of new models. The agreement is meant to see independent testers checking the safety of new AI models instead of the companies themselves.

The event, which brought together nations from around the world to discuss the opportunities and risks posed by AI and how those risks could be mitigated, also resulted in the "Bletchley Declaration" between 28 participating countries.

The declaration recognised the need to address risks represented by AI development. So-called frontier AI development has raised concerns over its potential impact on large scale governance, from employment and elections to national security and international relations. OpenAI, Anthropic, Microsoft, Meta and Google were among companies participating, as well as Elon Musk, the ChatGPT boss, US vice president Kamala Harris, EU Commission president Ursula von der Leyen, and Wu Zhaohui, Chinese vice minister of science and tech. Representatives from Australia, Brazil, Korea, India, Singapore, Switzerland, theUAE, Japan, Canada, also attended, amongst others. 

China signed the declaration, saying: "We welcome the international community's efforts so far to cooperate on AI to promote inclusive economic growth, sustainable development and innovation, to protect human rights and fundamental freedoms, and to foster public trust in AI systems, to fully realise their potential." 

On the second day of the event, the United Nations supported an expert AI panel along the lines of the Intergovernmental Panel on Climate Change. France will host another AI safety summit in 2024.

Meanwhile, the EU is moving closer to passing an AI act. US President Joe Biden also recently signed a new AI executive order that directs new government-wide federal standards and policies for the responsible development and use of this emerging technology. The order will require AI system makers to share model training and safety testing results before public releases, strengthen user and data privacy practices, prevent discrimination, and identify a common framework for how US Federal agencies adopt and procure commercial AI systems. See more here. 

UBS Global Wealth Management believes that regulations remain limited in enforcement, with major governments in their view primarily relying on incentives instead of enforcement. “By contrast, the more stringent AI chip export controls and sanctions the US announced last month were more material and enforceable, and so the market impact was more significant,” UBS said in a note.

“We think establishing consensus rules of the road now, while adoption and capabilities are still at an early stage, would be a better outcome than a late-stage intervention that might risk undercutting investments and harming the sector,” UBS continued. “Recent tech results confirmed robust AI infrastructure spending ahead, and support our expectation for a sharp recovery in revenue next year,” UBS added.

With AI demand broadening, UBS believes that mid-cycle segments such as software and the internet offer the best risk-reward within global tech. Given recent selling pressure on the sector, UBS thinks that investors considering adding exposure can look to beaten-down AI beneficiaries, such as global semiconductor stocks. 

Benefits of AI range from automating repetitive tasks, providing data-driven advice in specific areas such as portfolio optimisation, risk management and tax analysis.

Annabelle Bryde, managing director and head of UK Private Bank and Crown Dependencies at Barclays Private Banks, believes that AI will play an important role in wealth management, complementing the banker's role, rather than replacing it. She thinks human-driven advice from wealth managers is here to stay. She also believes that AI must be regulated, and this should start sooner rather than later. See more here.