This report, initiated by a presidential order, emphasises the necessity of ensuring the safe and secure development and application of AI technologies. Led by the Treasury’s Office of Cybersecurity and Critical Infrastructure Protection (OCCIP), the report delves into the complex interactions between AI and financial institutions, highlighting various challenges and opportunities that arise.
One significant challenge is the divergence in AI capabilities between large and small financial entities. While larger institutions possess the resources to develop sophisticated AI systems, smaller firms often struggle due to limited access to necessary data and expertise.
Additionally, there's a notable gap in data availability for training AI models, particularly in the context of fraud prevention. Larger institutions, with access to extensive historical data, benefit from a distinct advantage over smaller counterparts. Regulatory coordination emerges as another critical concern. Financial institutions and regulators are endeavouring to navigate the evolving regulatory landscape surrounding AI. However, discrepancies in regulations across different jurisdictions pose challenges to achieving harmonised governance frameworks.
The report suggests expanding existing risk management frameworks, such as the National Institute of Standards and Technology (NIST) AI Risk Management Framework, to better address AI-specific risks within the financial sector. Transparency and accountability in AI deployment are highlighted, with recommendations for transparent data supply chain mapping practices and standardised labelling of AI systems.
The opacity of certain AI models, particularly black-box systems, presents a notable challenge. Addressing this challenge requires further research to enhance model interpretability and accountability. A shortage of AI talent within the workforce was also noted, particularly among smaller institutions. The report recommends developing best practices for skill development and providing role-specific AI training to bridge critical competency gaps.
Establishing a common language for discussing AI across the financial sector is deemed essential for fostering clarity and coherence in discussions among stakeholders. Efforts to standardise governance frameworks and technical standards for digital identity solutions are underway to enhance cybersecurity within the financial sector.
Given the global nature of financial services, international collaboration is emphasised as crucial for effectively addressing AI-related risks and fostering cross-border cooperation. The report draws insights from interviews with stakeholders across the financial services sector, providing an overview of current AI use cases, best practices, and recommendations. Treasury intends to collaborate with stakeholders to address AI-related challenges in the financial sector, with a focus on consumer impact and inclusivity.
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