Rolling in the deep(fakes)

Deepfakes are digital forgeries. They are highly credible multimedia representations of altered or fabricated events, created using sophisticated artificial intelligence (AI) techniques. Despite the remarkable contribution of the underlying technology to innovation in several fields, deepfakes per se are a powerful weapon for disinformation and fraudulent operations. In the financial sector, the increasing importance of online platforms for payments and banking exposes consumers and retail investors to AI-enabled attacks. Moreover, at the macro level, malicious dissemination of deepfakes through information channels such as social media can sow distrust toward financial institutions, and ultimately have systemic effects. In this paper, we describe the rapidly evolving deepfake technology, with a focus on the threats it poses to the financial sector. We then propose an analytical approach and a set of policy instruments for the effective countering of malicious deepfakes.