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The financial world is undergoing a “radical transformation” driven by new technologies like artificial intelligence (AI), open finance, and Big Data analytics, according to Panikkos Vakkou, Vice Chairman of the Cyprus Securities and Exchange Commission (CySEC).
In a recent article, Vakkou highlighted the critical need for citizens to develop digital financial literacy to manage the benefits and risks of this new era.
While AI offers powerful capabilities, such as the ability to “analyse vast data, make investment decisions, cutting costs and reducing the need for intermediaries,” Vakkou cautioned that reliance on these tools presents “serious risks.”
He warned that “lack of transparency in algorithms and financial interests, absence of accountability, the use of incorrect or incomplete data, as well as threats to data privacy and security, can all lead to poor choices.”
Moreover, he said that this is particularly crucial in a sector where “our decisions can profoundly influence our quality of life and future.”
Vakkou emphasised the growing knowledge gap, noting that “technology evolves at a pace that our knowledge often struggles to keep up with.”
This disparity leaves citizens “vulnerable to fraudsters who exploit such ignorance, luring unsuspecting investors with AI-generated content and persuasive advertisements.”
The CySEC Vice Chairman argued that if “we want technology to serve us rather than harm us, we must learn how to use it properly.”
He stressed that “today’s citizen needs not only basic financial education but also the ability to use modern digital tools safely.”
Moreover, Vakkou stated that “digital financial literacy is now one of the most crucial factors directly influencing our quality of life.”
He added that “people who know how to manage their money make better decisions, protect themselves from scams, and reduce financial stress.”
Furthermore, he insisted that “as technology and financial markets continue to evolve, education and continuous training will be essential not only for citizens but also for professionals in the field.”
Cyprus has made “significant progress in recent years,” according to Vakkou, pointing to the ongoing National Strategy for Financial Literacy.
He explained that this strategy “aims among other things to prepare citizens for an almost fully digital management of their finances.”
The CySEC official also commended the Education Ministry for its “important step toward the eventual inclusion of a dedicated course that will equip younger generations with practical financial knowledge,” through the introduction of an educational programme in secondary schools.
This direction “aligns with European and international policy priorities,” he explained, as the European Union is placing a “clear emphasis on financial inclusion and digital financial literacy.”
Vakkou further stated that the challenge extends beyond basic knowledge and includes awareness for social inclusion.
Although “young people may be more tech-savvy,” they “often act impulsively and are easily influenced by social media influencers or deceptive ‘get-rich-quick’ schemes.”
Conversely, “older individuals, on the other hand, can feel isolated and uneasy using digital platforms or smart devices let alone more complex tools such as robo-advisors and algorithm-based trading applications.”
He also mentioned that to safely utilise the potential of AI and the digital economy, “we must invest not only in technology but also in human knowledge and empowerment.”
“A society of informed and critically thinking citizens can innovate, protect itself from risks, and create a fairer and more sustainable financial future,” he concluded.
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