Five Bank Regulators Seek Input on How Financial Institutions Use AI
Last week, five federal financial regulatory agencies—the Federal Reserve Board, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC)—released a request for information (RFI) to better understand how financial institutions use artificial intelligence (AI).
According to a press release, “the agencies seek information from the public on how financial institutions use AI in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations.”
“More specifically, the RFI seeks comments to better understand the use of AI, including machine learning, by financial institutions; appropriate governance, risk management, and controls over AI; challenges in developing, adopting, and managing AI, and whether any clarification would be helpful,” the release also says.
The regulators note a number of potential benefits of AI for financial institutions, including improved efficiency, enhanced performance, and cost reduction for financial institutions. They also note AI’s ability to identify relationships between variables that would otherwise likely go unnoticed. And they say AI can play a role in processing information and data, including text and large datasets that are otherwise unwieldy or impractical to process by traditional methods.
“Other potential AI benefits include more accurate, lower-cost, and faster underwriting, as well as expanded credit access for consumers and small businesses that may not have obtained credit under traditional credit underwriting approaches,” they write.
“The agencies support responsible innovation by financial institutions,” the regulators stated in the RFI document. “With appropriate governance, risk management, and compliance management, financial institutions’ use of innovative technologies and techniques, such as those involving AI, has the potential to augment business decision-making, and enhance services available to consumers and businesses.”
Public comments will be accepted for 60 days after the RFI is published in the Federal Register.