摘要: Technological advancements constantly reshape America's banking and consumer finance ecosystem. Today, artificial intelligence ("AI") is among the most intriguing technologies driving financial decisionmaking. Powerful enough on its own to warrant significant investment, AI has even more transformative potential when coupled with industry momentum toward greater use of "big data" and alternative or non-traditional sources of information.

 

Technological advancements constantly reshape America's banking and consumer finance ecosystem. Today, artificial intelligence ("AI") is among the most intriguing technologies driving financial decisionmaking. Powerful enough on its own to warrant significant investment, AI has even more transformative potential when coupled with industry momentum toward greater use of "big data" and alternative or non-traditional sources of information.

With material changes in banking processes on the horizon, regulators and industry participants brace themselves for the full impact of AI and big data. This article contributes to ongoing discussion by addressing the increasing regulatory focus on issues unique to, or heightened by, AI and big data. After exploring the rise of regulatory interest in these areas, we address specific regulatory risks under banking and consumer financial laws, regulations, and requirements, including: (i) the Equal Credit Opportunity Act ("ECOA") and fair lending requirements; (ii) the Fair Credit Reporting Act ("FCRA"); (iii) unfair, deceptive, and abusive acts and practices ("UDAAPs"); (iv) information security and consumer privacy; (v) safety and soundness of banking institutions; and (vi) associated vendor management expectations.

As the use of AI and big data in financial services gradually becomes an industry norm, regulators have become increasingly interested and also have developed a more sophisticated understanding of the area. Federal and state regulators have now weighed in on various product types and banking processes. While doing so, they have exhibited movement from basic information gathering to a more sophisticated approach to understanding regulatory issues. Regulators have not yet promulgated material regulation specifically addressing AI and big data issues and such active regulation appears to remain a ways off but they have arguably moved past infancy in their approaches to such issues.

the Government Accountability Office has issued two reports (in March 2018 and December 2018) promoting or recommending interagency coordination on flexible regulatory standards for nascent financial technology ("Fintech") business models (including through "regulatory sandboxes") and the use of alternative data in underwriting processes.

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Full Text : Mondaq

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