The AI Book

CHAPTER 58Regulation of AI within the Financial Services Sector

By Tim Molton¹

¹Associate, MJM Limited

Governments are invariably reactive when legislating for technological advances, rather than having the foresight to anticipate how emerging technologies might develop and consequently be utilized throughout varying industries. This is true even of relatively modest developments, but particularly those which are incredibly complex and have the potential to disrupt global markets, such as artificial intelligence (AI).

The same could be said of financial services professionals, many of whom endorse a laissez-faire approach to technology, not seeking to learn about or engage in discussions surrounding emerging technologies. There is an expectation (albeit predominantly among the pre-millennial generation) that new technologies will not ultimately be adopted “en masse” within the financial services sector, but merely used by a small number of businesses with limited efficacy before being superseded or becoming redundant.

This is demonstrated by the banks’ ongoing struggle with their legacy systems and the view that wholesale (and extremely costly) changes to accommodate innovative technology are not a palatable solution – hence the rise of the challenger banks and other FinTechs. Indeed, the emergence of AI in banking is due largely to innovative FinTech startups rather than the established institutions, albeit many banks have partnered with AI companies to offer improved services ...