Regulatory Aspects of Artificial Intelligence Implementation in the Financial Sector

Analysis of Benefits and Risks

Abstract

This paper focuses on understanding how the insertion of Artificial Intelligence (AI) and Machine Learning technologies in the financial sector, which is likely to be regulated as the importance of digitally enabled financial services increases in parallel with the emergence of several international principles relevant to the governance of these technologies. Although the explicit reliance on (AI) in the financial sector is still at an early stage, owing to the lack of legislative frameworks governing it, this has not prevented some cautious regulatory authorities from introducing (AI) and machine learning techniques on exceptional basis and as an experiment in the financial sector. This paper concludes that the balance of benefits and risks from the insertion of technologies in the financial sector must be subject to flexible and balanced regulation, rather than intensive regulation that would curb innovation in (AI).