Maryan Abdelmesih, MPP’s Post

Our latest blog on The TRADE News about the growing regulatory risk related to #AI, ahead of our upcoming Data Minds webinar on all things risk and data! https://lnkd.in/eV-Fmh8a #fintech #regulation

Financial Sector: Recent Developments and Main Challenges [Prepared by Juan-Carlos Crisanto, Cris Benson Leuterio, Jermy Prenio and Jeffery Yong] The rapid integration of artificial intelligence (AI) technologies into the financial sector presents significant opportunities alongside notable challenges. This report by the experts at the Bank for International Settlements – BIS focuses on the current regulatory landscape for #AI in #finance and the key challenges it poses.  AI offers transformative potential in enhancing operational efficiency, #riskmanagement, and #customerexperience. However, it also introduces critical regulatory gaps in areas such as systemic risk, data privacy, and ethical accountability. The opacity of AI systems—often referred to as the “black box” problem—coupled with biased decision-making processes, poses serious threats to financial stability and consumer trust. Consequently, regulatory authorities must adopt proactive, flexible, and globally coordinated approaches to address these risks effectively.  The report identifies core challenges faced by financial institutions and regulators. Firstly, existing regulatory frameworks often struggle to keep pace with the rapid technological evolution of AI. The complexity and dynamic nature of AI necessitate the development of adaptive and forward-looking policies rather than static rules. Secondly, ensuring accountability and oversight of AI systems is crucial for maintaining trust in the sector. Moreover, aligning international standards is vital to mitigating regulatory arbitrage risks in #globalfinancialmarkets that stem from AI-driven solutions.  Another critical insight from the report emphasizes that regulatory approaches must balance risk mitigation with the promotion of innovation. To unlock the full potential of AI, regulators should establish policies that enable innovative business models and new market entrants. Simultaneously, ethical principles must be embedded at every stage, from the design to the implementation of AI systems.  In conclusion, the role of artificial intelligence in the financial sector extends beyond operational processes, reshaping market dynamics and regulatory paradigms alike. This transformation mandates the seamless integration of technological advancements into regulatory frameworks, reinforced by principles of transparency and accountability. Strengthened international cooperation is also imperative to address the global challenges posed by AI adoption.  To fully harness the benefits of 3AI while minimizing systemic risks, stakeholders across the sector must adopt an innovative and collaborative approach. For the #financialsector, AI represents a frontier where opportunities and risks coexist, requiring careful calibration. Collective efforts by regulators and #financialinstitutions will be pivotal in ensuring the secure and sustainable integration of AI into the #industry.  

The U.S. Department of the Treasury is seeking public comment on the risks and opportunities posed by the use of AI in financial services. With financial services firms pumping billions of dollars into harnessing the power of AI, regulators have been scrambling to understand, and guard against, the potential risks associated with the technology. The Treasury says it wants to increase its understanding of how AI is being used within the financial services sector and the associated opportunities and risks, including potential obstacles to the responsible use of the technology. #AI #regulation #riskmanagement

This is why it is essential to have documented procedures, training, and oversight for your firm's use of #AI. The new rules the European Securities and Markets Authority (ESMA) set apply to banks and #InvestmentFirms within the #EuropeanUnion. These rules focus on firms maintaining full responsibility and legal obligations to protect customers using AI. This includes ensuring appropriate oversight and risk management to mitigate AI-related risks such as lack of explainability, bias, and operational risks. While the UK has not implemented exact matching rules (yet), regulated firms are expected to adhere to specific guidelines. The Financial Conduct Authority (#FCA) requires firms to ensure that AI systems treat customers fairly and not mislead them, aligning with the FCA’s broader principles of ensuring transparency and fairness in financial services. If your firm is unsure about its AI governance or wants to stay updated with the latest changes, the Impact IT team can help. https://lnkd.in/giEpKBNk

As more advisors become accustomed to using AI to write e-mails, draft financial plans and rebalance portfolios, regulators are putting some guardrails around how those time-saving activities are conducted. On Thursday, the Canadian Securities Administrators released a notice and consultation on the use of AI. Here are some of the highlights for advisors.

AI is a huge talking point and continues to make waves across the business community. Vikas Krishan, Chief Digital Business Officer & Head of EMEA at our client Altimetrik offers invaluable insights in his article for Global Banking & Finance Review: The EU AI Act: help or hindrance to Financial Services? As AI continues its exponential growth, understanding regulatory frameworks is critical for businesses across the board, no more so than in financial services. Vikas breaks down the implications of the EU AI Act for Financial Services, addressing everything from risk categorisation to the need for robust governance structures. It's worth a read. https://lnkd.in/eqEBzdbF #AI #Finance #Marketing

Britain's financial watchdog launches AI lab. 🔎 Britain’s financial watchdog is launching an AI lab to bring together tech firms, academics and regulators to better understand the technology’s present and future impact on financial services. Announced in a speech by Jessica Rusu, chief data, information and intelligence officer at the Financial Conduct Authority (FCA), the AI lab will support the implementation of AI in finance and inform how it can be regulated. ➡️ https://lnkd.in/eybNwfFZ 🔗 #ai #regulators #technology #finance #fca #support #techfirms #UKtech

🌍 What are the current trends in the adoption of #AI in finance? 📢 Exciting insights from the recent OECD - OCDE-Financial Stability Board (FSB) Roundtable on #AI in Finance! 🌍 🤖The roundtable, held on September 30, explored the rapid adoption of #AI in finance—especially in banking, insurance, and asset management. Key takeaways: Predictive #AI, including #ML and Generative AI (#GenAI), is transforming financial crime detection, underwriting, and portfolio management.🤖 #GenAI is mainly being used internally for tasks like summarization, information retrieval, and code generation.🤖 Key challenges include data governance, model risk, and maintaining ethical standards.🤖 🌟 The EU #AI Act is crucial here. It aligns with the roundtable's call for a risk-based approach and international collaboration to ensure responsible #AI use in finance. 📊 🌐How does the EU #AI Act apply? DM or email the team for more details: contact@ai-and-partners.com. #AIinFinance #OECD #FSB #EUAIAct #ResponsibleAI #FinancialServices

𝗔𝗜 𝗶𝗻 𝗨𝗞 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀: 𝗪𝗵𝗮𝘁’𝘀 𝗡𝗲𝘅𝘁? The Bank of England's and Financial Conduct Authority's third survey of AI and Machine Learning respondents across the Financial Services sector reveals that 85% of UK financial institution respondents now integrate #AI into their operations—reshaping efficiency, risk management, and customer engagement. But with great power comes great responsibility. The Report flags critical challenges: #data #privacy risks, algorithmic #bias, and the urgent need for strong #governance frameworks. 𝟮𝟬𝟮𝟱 𝗮𝗻𝗱 𝗯𝗲𝘆𝗼𝗻𝗱?  A clear regulatory roadmap is essential to harness AI’s potential while safeguarding ethical practices and consumer trust. With the anticipated publication of the new UK AI Bill on the horizon, legislators are poised to define a new legal framework that could set global standards for AI accountability, #transparency, and #fairness in financial services. This marks a pivotal moment for firms to align innovation with #compliance and build a future rooted in responsible AI use. As AI shapes the future of finance, the question isn’t just about leveraging technology—it’s about leading with integrity. Is your organisation ready? #ArtificialIntelligence #Finance #UKRegulation #EthicsInAI #Innovation #RiskManagement #Leadership #AIFuture #ResponsibleInnovation