OCC’s Hsu Sees Benefits to AI in Banking, But Warns of Potential Risks
Michael Hsu, acting U.S. Comptroller of the Currency, recently highlighted the potential benefits and risks of using widespread artificial intelligence (AI) in banking during his remarks at the American Bankers Association’s (ABA) Risk and Compliance Conference entitled, “Tokenization and AI in Banking: How Risk and Compliance Can Facilitate Responsible Innovation.”
“The use of AI has the potential to reduce costs and increase efficiencies; improve products, services and performance; strengthen risk management and controls; and expand access to credit and other bank services,” Hsu said.
He warned of potential risks and challenges of AI usage too, most notable of which is alignment. AI networks are usually based on neural networks instead of programmed software, so they “may or may not do what we want or behave consistent with our values,” he stated.
The banking industry has experienced increases in several types of fraud, like synthetic media and synthetic identity fraud. PYMNTS recently considered this trend in discussion with Erika Dietrich, head of risk services at ACI Worldwide.
“We continue to see a hockey stick increase in digital identity information being compromised and used for synthetic identity fraud, account takeover fraud and other types of digital identity abuse,” she said.
Alternatively, using AI to power digital identity verification can help protect companies against various types of digital fraud, as 42 percent of consumers said they want to confirm their identity each time they pay for a good or service.