The ASIC has released its inaugural report on the use and adoption of AI by financial services and credit licensees.
The report underscores a pressing need for robust governance frameworks to keep pace with the rapid integration of AI technologies. This necessity arises from findings that show a majority of licensees are planning to increase their AI use, which could significantly influence consumer interactions and overall market dynamics.
ASIC Chair Joe Longo emphasized the importance of updating governance structures to align with the increasing deployment of AI. The report highlighted that while current AI applications primarily support human decision-making and operational efficiencies, about 60% of the surveyed licensees intend to enhance their AI capabilities. Such escalation in AI usage necessitates stringent governance to mitigate risks associated with AI, such as misinformation, consumer manipulation, and potential data breaches.
Despite the cautious approach currently exhibited by licensees in their AI applications, the review revealed concerning gaps. Nearly half of the licensees lack policies that address consumer fairness or bias, and an even smaller percentage have measures governing the disclosure of AI usage to consumers. This oversight could lead to a governance vacuum, especially as competitive pressures push for quicker AI adoption without corresponding updates in governance frameworks.
Joe Longo’s commentary was stark, outlining the dual-edged nature of AI in financial services: “When it comes to balancing innovation with the responsible, safe and ethical use of AI, there is the potential for a governance gap—one that risks widening if AI adoption outpaces governance in response to competitive pressures.”
Furthermore, Longo stressed that licensees should not merely wait for new AI regulations but proactively ensure their current practices and obligations are sufficient to manage the evolving landscape. He advocated for comprehensive due diligence, especially in managing third-party AI supplier risks, to safeguard consumer interests and maintain market integrity.
ASIC’s ongoing commitment to monitoring AI usage aligns with its strategic objectives to address poor implementations of AI as outlined in its Corporate Plan. The regulatory body will remain vigilant, ready to enforce compliance as necessary to protect consumers and uphold the safety and soundness of the financial system.
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