The Treasury Department today released a report with recommendations on potential next steps for regulators and the private sector on the use of artificial intelligence in financial services.
Earlier this year, the Treasury Department sought public comments on the uses, opportunities and risks of AI in the financial sector. The American Bankers Association and 21 state bankers associations filed a joint comment letter in August in response. Many respondents said that emerging AI technologies such as generative AI are driving expanded use cases but also introducing new risks, leading firms to be cautious about deploying them broadly in customer-facing applications, according to the report. Respondents also highlighted differences in supervision for banks and nonbanks developing and deploying AI, as well as the resource gap and dependency on third-party providers for smaller financial firms.
According to the report, respondents expressed support for government actions such as providing additional clarification on data privacy standards, expanding consumer protections and pursuing private-public partnerships to share information and best practices. The Treasury Department itself made several recommendations. One was to continue international and domestic collaboration among governments, regulators and the financial services sectors to promote “consistent and robust” standards for AI use.
Other Treasury Department recommendations included further analysis and stakeholder engagement to explore solutions for any identified gaps in the existing regulatory frameworks; continued coordination among financial regulators to identify potential enhancements to existing risk management frameworks; information sharing between the financial services sector and government agencies to develop data standards, share risk management best practices and enhance understanding of emerging AI technologies. It also recommended financial firms prioritize their review of AI-use cases for compliance with existing laws and regulations before deployment “and that they periodically reevaluate compliance as needed.”
