Canada's financial institutions regulator has published a report is association with the Global Risk Institute
How can we ensure that artificial intelligence (AI) is used ethically by financial institutions?
Despite the recent call to pause ‘giant AI experiments’ by high-profile names including Elon Musk and AI leaders, many believe the genie is already out of the bottle.
AI is here to stay and is already disrupting many industries, so Canada’s regulator of financial institutions is considering how it can be used correctly by the banking and financial services sector.
In a new report in association with the Global Risk Institute (GRI), the Office of the Superintendent of Financial Institutions (OSFI) looks at the ethical, legal, and financial implications of AI in financial services.
Drawing on insights from policyholders, financial industry stakeholders, and academics, the report looks at how current AI risk management frameworks must adapt to remain relevant, forward-looking, and responsive to industry needs.
Superintendent Peter Routledge said that recent advances in machine learning represent a great opportunity for financial organizations.
“However, balancing regulation and innovation is essential. While it is important to ensure financial institutions remain competitive by responsibly leveraging these innovations, the financial stability of our system and its fairness to those who use it are of the upmost importance," the OSFI chief added.
Recommendations
The partnership between OSFI and GRI created the Financial Industry Forum on Artificial Intelligence (FIFAI) which led to the development of the EDGE principles, Explainability, Data, Governance and Ethics:
- Explainability enables customers and relevant stakeholders to understand how an AI model arrives at its conclusions.
- Data leveraged by AI allows financial institutions to provide targeted and tailored products and services to their customers or stakeholders. It also improves fraud detection, enhances risk analysis and management, boosts operational efficiency, and improves decision making.
- Governance ensures a framework is in place that promotes a culture of responsibility and accountability around the use of AI in an organization.
- Ethics encourages financial institutions to consider the broader societal impacts of their AI systems.
"AI applications will develop in scope and scale, so guardrails are needed to ensure the benefits of AI continue to be realized while the risks are prevented or mitigated. A robust risk management approach is critical to securing the public's confidence in Canada's financial services sector and its use of AI,” said Sonia Baxendale, GRI president and CEO.
Read the full report: https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/rep-rap/Pages/ai-ia.aspx
