Hemant Sood, Founder and Managing Director of Findoc Investmart Pvt. Ltd, sums up the core risk: “AI chatbots are excellent for financial literacy, but the risk begins the moment a fluent answer is mistaken for regulated, personalised advice.”
The quality of the prompt matters
The accuracy of an AI-generated financial response depends largely on how the question is framed. If users do not provide the right context or leave out important details about their financial situation, the chatbot’s answer may turn out incomplete or misleading, potentially leading to financial loss.
Navy Vijay Ramavat, Managing Director, Indira Securities, points out that intent isn’t usually the problem: “The intent here is fine. It’s the execution that usually goes wrong.” He adds a simple principle to keep in mind: “AI is there to help you, not to do your thinking for you.”
The danger of oversharing personal data
In an attempt to get more precise responses, many users end up sharing sensitive personal and banking information with AI tools, such as their Aadhaar number, PAN number, credit or debit card details, bank account information, income and debt details, phone number and email address. Such information, once shared, may not always remain private, given how some AI platforms handle user data.
Ramavat warns that this habit is riskier than it seems: “Feeding it unmasked financial data is one of the simplest ways to open yourself up to fraud.”
Amit Suri, CFP, Founder and CEO, AUM Wealth, explains what’s at stake once such data is compromised: “Financial data such as PAN, Aadhaar, bank account details, investment holdings, tax records, or passwords can be exploited for identity theft, financial fraud, unauthorized transactions, phishing attacks, or social engineering scams.”
Arun Patel, Founder & Partner, Arunasset Investment Services, echoes the concern, noting how leaked data can be weaponised: “They use real personal/financial details to make the scam sound genuine.”
Patel is also candid about why he avoids sharing sensitive data with AI tools altogether: “We don’t know how secure our data and our chats with the platforms are.”
How to use AI responsibly for financial queries
Given that AI tools are still evolving and prone to errors, users need to exercise caution while using them for money matters.
Review the platform’s privacy and data retention policies: Paid or enterprise versions of AI tools generally offer stronger data protections than free versions, so it helps to check what level of protection your version provides. Sood cautions that this alone isn’t a guarantee of safety: “A paid subscription alone doesn’t make confidential data safe to upload.”
Switch off data-training permissions: Most AI platforms allow users to opt out of having their data used for model training, though this setting is often buried within privacy settings and may take some effort to locate.
Strip out personal details before uploading documents: When sharing bank statements, bills or other financial documents with an AI tool, sensitive information such as names, account numbers, addresses, transaction dates and merchant names should be removed. Only the minimum information necessary should be shared. Ramavat suggests a similar workaround for text prompts: “Never mention yourself, your family, or people close to you by name. Use a placeholder instead.”
On accuracy, Sood flags a real example of AI falling behind on tax rules: “We’ve already seen chatbots quote the pre-budget equity LTCG rate of 10% well after it was revised to 12.5% in July 2024.”
Suri agrees that AI-generated answers on tax or regulatory matters should never be taken at face value: “A confident answer is not necessarily a correct answer.”
Patel goes a step further, questioning who is answerable when AI gets it wrong: “With AI, who takes accountability.”
Ultimately, AI tools are best used to support research, analysis and decision-making, rather than as a substitute for professional advice and independent judgement. As Sood puts it: “AI should sit at the education layer, not the decision layer.”
