The BoE and the PRA have responded to requests for an update on the strategic approach they are taking to AI. The response notes that AI and Machine Learning is already in quite wide use in many parts of the financial sector and is being used for purposes such as improving operational efficiency, financial crime prevention and data analysis. As the FCA has already stated in respect of its own approach, the BoE/PRA also take a technology-agnostic approach to supervision, but stress that this does not mean “technology-blind” and that when specific technologies present specific risks, the regulators will address and where necessary call out concerns.
The adoption of AI/ML remains a key area of focus, and the regulators are currently focusing on four potential areas:
- data management;
- model risk management;
- governance;
- operational resilience and third party risks.
The response notes and welcomes the Government’s five principles, which it says align with those of the financial regulators.