The federal financial institutions regulatory agencies collectively issued a Request for Information and Comment (RFI) on March 31, 2021, to better understand how artificial intelligence (AI) and machine learning (ML) are used in the financial services industry and identify areas where additional “clarification” (possibly in the form of informal guidance or more formal regulation) could be useful.
Issued collectively by the Board of Governors of the Federal Reserve System (the Fed), the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, the RFI seeks commentary on 17 questions centering on how financial institutions ensure quality of AI/ML outputs and manage model risk.
Benefits and Risks of AI/ML in the Financial Industry
As highlighted in the RFI, AI/ML developments present significant opportunities to improve bank operations and the delivery of financial services. Currently, financial institutions are using and exploring cost-effective uses of AI/ML related to, among other things, fraud management, Bank Secrecy Act compliance, improved credit…
