The Cyprus Securities and Exchange Commission (CySEC) has released a new retail investor guide on navigating digital finance safely to mark its participation in World Investor Week 2025.

The guide was issued as part of the global investor education campaign. The campaign’s key themes this year were Technology and Digital Finance, Artificial Intelligence (AI), and Fraud and Scam Prevention.

“As technology reshapes the financial world, artificial intelligence (AI) is transforming how we save, invest, and make financial decisions,” CySEC said.

“But along with opportunities come new risks, from misleading information to online scams,” it added.

The guide stresses that as technology reshapes the financial world, artificial intelligence is transforming how people save, invest, and make financial decisions.

Modern digital finance is redefining how we save, invest and transact, positioned at the intersection of technology and money.

The guide outlines that innovations such as AI are enhancing financial services while also introducing new risks.

In its guide, the commission quoted Stephen Hawking, who said that “the rise of powerful Al will either be the best or the worst thing ever to happen to humanity; we do not yet know which”.

AI uses digital technology to perform tasks that normally require human intelligence, such as solving problems or spotting patterns.

It learns by analysing large datasets, detecting patterns through algorithms, and improving with experience.

In the financial markets, CySEC explained, AI is becoming more active and can analyse data, suggest investments, and even make trades in seconds.

AI can make finance clearer and more accessible by turning complex financial data into simpler, easy-to-understand information.

It can provide personalised support through chatbots or virtual assistants and can help individuals manage their personal finances more effectively.

For instance, AI can analyse spending, suggest realistic budgets, forecast cash flow by identifying patterns, and help detect fraud by recognising unusual or suspicious transactions.

AI can even support automatic saving by transferring small amounts into savings accounts based on spending habits.

However, the guide cautioned that AI tools are not designed or regulated for the provision of financial advice and have no legal duty to act in an investor’s best interest.

In March 2025, the ESMA cautioned that unregulated AI apps and stock-picking tools could mislead investors, misuse data, and leave them unprotected.

AI systems can generate content that seems convincing but is inaccurate or misleading, a problem known as “AI hallucinations“.

Investors must be careful that AI tools are subject to model bias, data misuse, manipulation, errors, and can produce fabricated information.

If an investor suffers a loss using unregulated AI tools, they may not have access to a financial ombudsman or compensation schemes.

CySEC advises that automation should support rather than replace informed human judgment.

The guide also explained that younger people, having grown up with technology, often seek financial advice from online communities and influencers, while older generations rely on traditional sources.

Looking ahead, the European Commission is leading efforts to balance innovation and safety through the AI Act, which will set the foundation for responsible AI use in finance.

According to the OECD report “Financial Literacy in Cyprus (2025)”, digital financial literacy in the country remains worryingly low.

The average digital financial literacy score among people aged 15-79 is 44/100, and only 10 per cent reach the benchmark of 70/100 to be considered digitally financially literate.

These findings indicate that most consumers in Cyprus are not adequately prepared to navigate today’s increasingly digitized financial environment.

Worryingly, 17 per cent of adults reported having been victims of financial scams or fraud in the past two years.

Of those victims, 85 per cent did not reach even the basic level of financial literacy.

CySEC encouraged all consumers in Cyprus to strengthen their digital financial literacy and adopt safe online behaviours.

“Digital financial knowledge and critical thinking remain your most powerful safeguards,” the commission concluded.