A NEW FRONTIER: UNDERSTANDING ‘AI WASHING’ RISKS
The rapid expansion of artificial intelligence (AI) technology has led to its widespread adoption across multiple sectors, permeating business operations to such an extent that, according to McKinsey & Company, AI is projected to add $4.4 trillion to the global economy annually.
One sector undergoing particularly rapid transformation is financial services (FS). NVIDIA’s ‘State of AI in Financial Services: 2025 Trends’ report, which captures the views of 600 global FS professionals, states that 57 percent of respondents are using or considering AI for data analytics, while generative AI usage has risen sharply from 40 percent in 2023 to 52 percent in 2026.
In addition, 37 percent of respondents reported AI-driven operational efficiencies, while 32 percent believe AI offers a competitive advantage. The use of AI in trading and portfolio optimisation has increased to 38 percent from 15 percent, while its application in pricing, risk management and underwriting has grown to 32 percent from 13 percent. Overall, 34 percent expect AI to increase their company’s annual revenue by at least 20 percent.
However, as AI capabilities continue to advance at pace – with 83 percent of NVIDIA survey respondents stating that they are using or considering AI to enhance operational efficiency, security and innovation across business functions – associated risk exposures are also increasing. Among these is the emerging phenomenon known as ‘AI washing’ (AIW).
Manifestations
Comparable to ‘greenwashing’, a term used by regulators to describe companies that portray themselves as more sustainable than they truly are, AIW reflects growing concerns around unfair competition, deceptive business practices and other potentially actionable conduct that may mislead consumers or investors.
Jul-Sep 2026 Issue
Fraser Tennant