Six months after publishing a request for information on artificial intelligence in the financial sectorthe Treasury Department Thursday published a report filled with findings from feedback and recommendations for how the public and private sectors should approach technology in the future.
The department said the comments – from more than 100 letters submitted by financial companies, fintech companies, trade associations, consumer advocacy organizations, technology providers and others – paint a picture of the proliferation of AI use cases in the financial sector, as well as growing concerns. on the risks that generative AI can pose.
“Through this AI RFI, Treasury continues to collaborate with stakeholders to deepen its understanding of the current uses, opportunities and risks associated with AI in the financial sector,” said Nellie Liang, deputy Secretary of the Treasury in charge of domestic finance, in a press release. “The Biden Administration believes that continued stakeholder engagement like this is important to fostering innovation in financial services while mitigating potential risks.
Commonalities in comments included stakeholders’ desire to define standard definitions of AI that align with financial services, greater clarity around data privacy and security requirements, expanded protection of consumers and more uniform compliance.
The risks, for their part, have been grouped by the Treasury into six categories: data confidentiality, security and quality standards; bias, explainability and hallucinations; impacts on consumers, fair lending and financial inclusion; risks linked to concentration; risks related to third parties; and risks of illicit financing.
Respondents offered a variety of suggestions to mitigate these risks, from instituting stricter federal requirements for data collection and analysis to improving risk management frameworks and closer oversight of the concentration of AI suppliers.
The possibility of strengthening regulatory frameworks was frequently raised in responses to the RFI, with stakeholders advocating for Treasury to “prioritize intergovernmental coordination to provide consistent regulatory guidance, where appropriate, to facilitate sharing information and align governance approaches for the same activities,” notes the report. “Respondents also largely agree on the benefits of public-private partnerships to share trends, risks and best practices. »
Coordination on issues related to AI in the financial sector is essential, Treasury added, highlighting respondents’ aversion to disparate and often contradictory national laws that result in “unequal requirements for AI developers.” AI, users and financial companies of different sizes, as well as varied requirements.” product features for consumers. Last year, lawmakers in 31 states introduced nearly 200 AI-related bills, highlighting the increasingly disparate system in which financial companies must operate with AI.
Different international standards are another issue that businesses are being forced to take into account, the report says, with respondents highlighting the “fragmented regulation” that makes it extremely difficult to “coherently manage risks across the enterprise.” business “. This fragmentation also results in “radically different levels of consumer protection,” the ministry said.
The Treasury concluded its report with five “potential next steps” that it, other financial regulators and the industry as a whole could take regarding AI. The ministry would like to see increased collaboration between foreign and domestic stakeholders in financial services, as well as additional analysis and stakeholder engagement to flag gaps in regulatory frameworks. The agency also recommends continued coordination among financial regulators on “improvements” to these frameworks.
On the industry side, Treasury suggested that financial firms “prioritize their review of AI use cases for compliance with applicable laws and regulations before deployment and periodically reassess compliance if necessary.” Additional sharing of AI information between the financial services industry and federal agencies should be considered, the report adds, as well as the development of data standards that align with Treasury report on AI cybersecurity.