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Treasury issues request for information on use of AI in financial services Interesting article by By Peter D. Hardy & Nathaniel Botwinick on the U.S. Department of the Treasury (“Treasury”) released Request for Information on the Uses, Opportunities, and Risks of Artificial Intelligence (“AI”) in the Financial Services Sector (“RFI”). AI is a broad topic and the term is sometimes used indiscriminately; as the RFI suggests, most AI systems being used or contemplated in the financial services sector involve machine learning, which is a subset of AI. The RFI implicitly concedes that Treasury is playing “catch up” and quickly needs to learn more about AI and how industry is using it. The RFI discusses a vast array of complex issues, including anti-money laundering (“AML”) and anti-fraud compliance, as well as fair lending and consumer protection concerns – particularly those pertaining to bias. In the press release for the RFI, Under Secretary for Domestic Finance Nellie Liang stated that Treasury is seeking to understand . . . . how AI is being used within the financial services sector and the opportunities and risks presented by developments and applications of AI within the sector, including potential obstacles for facilitating responsible use of AI within financial institutions, the extent of impact on consumers, investors, financial institutions, businesses, regulators, end-users, and any other entity impacted by financial institutions’ use of AI, and recommendations for enhancements to legislative, regulatory, and supervisory frameworks applicable to AI in financial services. Treasury is seeking a broad range of perspectives on this topic and is particularly interested in understanding how AI innovations can help promote a financial system that delivers inclusive and equitable access to financial services. Continue reading the the full Article below: https://lnkd.in/e9uUAeS2 #FintechNews #Finance #ai #DigitalBanking #payments #BankingTechnology #fintech #fusionalgo #banking #temenos #p2pfintech #thinkers360

U.S. Department of the Treasury aims to better understand the opportunities and challenges that AI presents to financial institutions. Learn more: https://lnkd.in/efS2Zcdu #ArtificialIntelligence #FinancialServicesIndustry

AI's Growing Role in Finance: Opportunities and Risks In a rapidly evolving financial landscape, AI is emerging as a transformative force, bringing both promising opportunities and significant risks. The US House Financial Services Committee’s AI Working Group recently released a comprehensive report on the impact of AI in finance and housing. Here are the key takeaways: 🔍 Enhanced Access and Efficiency: AI has the potential to expand access to credit, enhance fraud detection, and improve customer service. For instance, AI-based underwriting models have shown a remarkable 177% increase in loan approvals for Black applicants in mortgage lending. ⚖️ Challenges of Bias and Privacy: Despite its benefits, AI poses challenges such as potential bias in decision-making and data privacy concerns. The report emphasizes the need for vigilant oversight to ensure AI systems comply with existing laws, including anti-discrimination regulations. 📊 Regulatory Insights: Financial regulators stress that the use of AI does not absolve institutions from following current laws. The report calls for financial regulators to have appropriate tools and expertise to oversee new AI products and services. 🌍 Global Leadership: The report highlights the importance of the US maintaining its leadership in setting global standards for responsible AI development in finance. Clear definitions and a common lexicon around AI are essential to avoid confusion and ensure consistency. 🔒 Cybersecurity Risks: The Treasury Department's separate report highlights the growing cybersecurity risks posed by AI in finance, particularly the technological gap between large institutions and smaller firms. The House panel's findings set the stage for ongoing debate on fostering innovation while protecting consumers and maintaining the integrity of the financial system. Join us in exploring the transformative potential of AI in finance and the necessary steps to ensure its benefits are realized equitably and safely. #ArtificialIntelligence #AIRegulation #FinTech #DigitalTransformation

There are multiple factors driving this, from staying competitive in a rapidly evolving market and technology that is changing at an unprecedented pace to the need to establish oversight and governance around AI within the bank. Take note, the frameworks and the regulatory agencies are going to insist on this. https://lnkd.in/gDDywvZ6

The European Commission is currently exploring "AI in Finance". This is a chance for you to influence the political debate. You can provide your opinion via survey or informal workshop. Both can be found on the EU website: https://lnkd.in/eWw4yMEy Be safe, have fun and smash your goals! #datadrivenvc #investtech #venturetech #venturecapital #venturedata #investmentstrategies #investmentdata #politics #europeancommission

AI in Finance: Key Insights from Treasury Secretary Janet Yellen’s Speech Today, Treasury Secretary Janet Yellen spoke at an AI conference hosted by the Financial Stability Oversight Council and The Brookings Institution. Here are the main points every banking and finance professional should know: Potential AI Risks 🎲 AI models are complex and not always transparent. This can create big risks. 🚩 Current systems might not handle AI risks well. We need better ways to manage these risks. 🌐 If everyone uses the same data and models, a problem with one can affect everyone. 🔗 Reliance on a few AI developers and data providers can increase risks. If one fails, it can affect many. 📉 Poor quality data can lead to biased financial decisions. This can result in unfair outcomes. Benefits of AI 💡 AI can provide better insights and efficiencies in finance. 🚀 AI can enhance customer support and fraud detection. 🔐 Innovations in natural language processing, image recognition, and generative AI can make financial services more affordable and accessible. Treasury's Role 🤝The Treasury is working closely with financial regulators to manage AI-related risks effectively. 🔍 The Financial Stability Oversight Council (FSOC), led by Yellen, will continue to monitor AI's effects on financial stability and support scenario analysis to understand potential risks and opportunities. ⚖ AI is being used to fight money laundering, terrorism financing, and sanctions evasion, with the IRS employing AI tools to improve fraud detection. #USTreasury #JanetYellen #Finance #AI #Banking #USRegulation

The use of 𝐀𝐈 in the 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐬𝐞𝐜𝐭𝐨𝐫 has accelerated and the federal government is having to play catch-up to create regulatory safeguards that support innovation. 🧠📈 While agencies that regulate the financial industry have issued some guidance on the use of AI, there are things that 𝐛𝐚𝐧𝐤𝐬 can start doing to ensure they are headed in the right direction. 🏦 Learn more about the 𝐛𝐞𝐬𝐭 𝐩𝐫𝐚𝐜𝐭𝐢𝐜𝐞𝐬 and 𝐞𝐦𝐞𝐫𝐠𝐢𝐧𝐠 𝐀𝐈 𝐫𝐞𝐠𝐮𝐥𝐚𝐭𝐢𝐨𝐧𝐬 from Tom Nicholson, Financial Services Manager at Capgemini Invent, in this BAI feature: ➡️ https://bit.ly/3AHlixK 🔍 #GetTheFutureYouWant #AI #Finance #Banking #Regulations

"Financial institutions must develop internal guidelines to operationalise the use of AI systems in a manner compliant with applicable regulation" 🏦 AI is well-established in financial services due to benefits such as automation of repetitive tasks and cost reduction, but it is important that it is governed in the right way, including through internal policies on issues such as risk management and lifecycle management To find out more about how AI is used in syndicated learning and the safeguards needed to minimize harm, check out Charles Kerrigan's blog on the Holistic AI feed below 👇 #ethicalai #fintech #financialservices #aiethics #responsibleai #AIgovernance

#4 - Balancing benefits and risks of AI in finance, the deployment stage We explored the benefits and risks of the data and model stages in AI development, as identified in the ECB’s Financial Stability Review (https://lnkd.in/eTSDNikG). Now, let’s look at what they are for the final stage—deployment—and see how they translate to transaction monitoring. 𝐑𝐢𝐬𝐤𝐬 include predictability and human oversight. AI models are typically adaptable and dynamic, which could make ensuring their predictability and controlling their behavior challenging once deployed. This underscores the need for robust, ongoing human oversight to ensure models continue to perform as expected and intended. Also, deploying and integrating models into existing (legacy) systems can be resource-intensive, posing challenges for institutions with scarce (technical) resources. 𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐢𝐞𝐬 include improved decision-making, facilitated via ‘... 𝑓𝑎𝑠𝑡𝑒𝑟 𝑎𝑛𝑑 𝑚𝑜𝑟𝑒 𝑐𝑜𝑚𝑝𝑟𝑒ℎ𝑒𝑛𝑠𝑖𝑣𝑒 𝑖𝑛𝑓𝑜𝑟𝑚𝑎𝑡𝑖𝑜𝑛 𝑝𝑟𝑜𝑐𝑒𝑠𝑠𝑖𝑛𝑔'. Additionally, the automation of routine tasks, such as training and updating or transaction reviews and compliance checks, potentially lowers operational costs and frees up specialists to focus on business-critical, high-value work. 𝐖𝐡𝐚𝐭 𝐒𝐲𝐠𝐧𝐨 𝐝𝐨𝐞𝐬: we use Automated Model Generation to create transparent, explainable models that facilitate and simplify human oversight. Our models seamlessly integrate into your existing transaction monitoring system, eliminating any costly migration to new systems or the need for building a specialized AI team. This makes leveraging AI’s capabilities for better detection accuracy and improved efficiency in transaction monitoring accessible to all institutions, regardless of size and available resources. 𝐔𝐩 𝐧𝐞𝐱𝐭: What’s your take? How do you see AI’s impact on transaction monitoring, especially in the deployment stage of the AI development cycle? Let’s continue the conversation in the comments! #aml #machinelearning #banking #compliance #transactionmonitoring #knowgoodcatchbad #automatedmodelgeneration #fincrime #finfraud #ecb 

Only few spots left and 6 days to go! 📅 AI in your banking processes? Get ready for the AI Act! 🚀 Join our educative webinar to dive deep into the AI Act and its impact on banking! 🗓 When: Wednesday, June 12, 2024 · 2:00 PM CEST 👥 Who is it for: Data, AI, Risk & Compliance experts 🔍 What’s covered: - Why the AI Act Matters for Banks: Learn how it identifies high-risk AI systems and which of your AI systems may be at risk. - Practical Compliance Steps: Explore open-source libraries and managing AI systems without protected attributes to ensure compliance. - Management Strategy: Understand how AI Act compliance fits into your bank's risk management strategy and the roles of compliance and risk management teams. Secure your spot: https://lnkd.in/gX4G5R4s #fintech #banking #ai #aiact