Bespoke rules covering artificial intelligence use are needed to limit risks to consumers and strengthen oversight across the financial sector, according to Durham University Business School, which studied the technology’s use in financial services.
Regulatory approaches are inconsistent across jurisdictions, with the European Union and China implementing specific legislation while the UK and US rely on principles-based approaches, the report stated.
“Financial services should not be governed by generic AI rules and instead need a model built around the sector’s particular risks,” Professor Habib Ahmed of the university’s Department of Finance wrote.
Identified risk areas include data mishandling, biased automated decision-making, reliance on external technology suppliers, and exposure to cyber threats.
It proposed a framework that sorts AI use into four tiers, ranging from banned applications to minimal-risk uses that fall outside the rules, building upon previous legislative models.
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