To coincide with Sibos 2019, the world’s premier financial services event, our specialists have pooled their expertise to report on and unravel the complex legal landscape facing financial institutions in an ecosystem increasingly focused on AI.

Artificial intelligence (AI) is widely seen as the key to competitive advantage by businesses and governments across the globe. In financial services, the benefits of running AI across the huge volumes of data firms hold include: achieving a better understanding of customers – allowing more informed and tailored products and services; internal process efficiencies; enhanced cybersecurity and reduced risk (especially around fraud and malicious activity).

To coincide with Sibos 2019, the world’s premier financial services event, our specialists have pooled their expertise to report on and unravel the complex legal landscape facing financial institutions in an ecosystem increasingly focused on AI.

The Report:

The impact in financial services

AI is increasingly used in the delivery of a variety of financial products from the provision of robo-advice to trading decisions. Given the long history of pioneering data analytics in the sector, financial services firms are very much primed to take advantage of this technology and the benefits it offers. The winners and losers in the new digital banking landscape will be defined by those that can best access, process and analyse data. It is possible that this could lead to a significant shift in market make-up and dynamics.

The risks

However, the deployment of AI solutions in financial services will involve machine-led decision making affecting financial customers and the processing of customers’ personal data by machines. Whilst this creates tremendous opportunities for business, it needs to be balanced against potential unwelcome outcomes for customers. These outcomes are not only unwelcome for customers but have the potential for complex legal, ethical and practical consequences and, ultimately, liability for the responsible party. Those looking to exploit this technology actively need to address these issues, many of which are new and need new responses.

The legal considerations

For firms looking to deploy AI solutions in the financial services there is plenty to consider from a legal point of view. Firms must comply with both their broader industry regulatory obligations as well as any AI specific controls. They should also ensure that their approach to artificial intelligence anticipates any emerging regulatory requirements placed upon them and the many developments in the space mean that interesting questions are arising. Overall, it is clear that the use of AI is a key board room issue that requires careful consideration and should be factored into the firm’s overall risk management framework.

With very little substantive law addressing the specific problems AI poses, the challenge for lawyers is to understand both how existing legal and regulatory frameworks might apply and how regulation might develop in this area.

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