Emma RadmoreJessica Rusu, speaking at the Alan Turing institute, has addressed the critical considerations for the best use of AI in financial services. She said that:
- AI regulation in financial services needs to be built on a platform of collaboration: she discussed whether regulation is necessary for the safe, responsible and ethical use of AI and, if it should be regulated, how;
- The principles of inclusion and diversity of thought are key to building better AI: she noted the strong desire of the UK financial regulators to see an industry that values diversity and inclusion – and that they understand a lot of work still needs to be done. She also noted that even firms with the best data are still not making best use of it to inform their D&I strategies; and
- Innovation will lead to better AI outcomes: she said AI has the potential to enable firms to offer better products and services, improve operational efficiency, increase revenue and drive innovation – and all of these things can lead to better consumer outcomes. She highlighted the FCA/BoE survey that shows the use of AI in financial services is accelerating at a great rate. This should bring great benefits, but will also bring novel challenges that need to be properly addressed. One risk firms had identified was lack of AI explanability.
On balance, then, the regulators are asking whether AI in financial markets can be managed through clarifications of the existing framework, or whether a new approach is needed – and reminded delegates the consultation period for this discussion paper ends on 10 February.
She moved on to discuss AI governance and risk management – and said FCA considers the SMCR gives it the right framework to respond to all innovations, including AI. She then looked at the work FCA’s Digital Sandbox is doing to help innovation and discussed the potential role of synthetic data by regulators. FCA plans to set up a Synthetic Data Expert Group soon.