Assistant Secretary for Financial Institutions Graham Steele delivered remarks before the Amazon Web Services (AWS) Gov2Gov Summit on Responsible Artificial Intelligence Innovation for the Public Sector. In his speech, Steele discussed the significant role of artificial intelligence (AI) in the financial services sector and highlighted both the opportunities and challenges associated with its adoption.
In a recent speech at the Amazon Web Services (AWS) Gov2Gov Summit, Assistant Secretary for Financial Institutions, Graham Steele, discussed the significant role of artificial intelligence (AI) in the financial services sector. According to the press release, Steele began his speech by acknowledging the importance of AWS and cloud computing in the financial sector, stating, "Cloud computing is no longer a nascent or emerging technology. It now supports some of the financial services sector’s most critical financial institutions, while providing security and operational resiliency for these institutions."
He emphasized the potential benefits of AI in financial services, including cost reduction, improved efficiency, and enhanced risk assessment. However, Steele also highlighted the risks associated with AI, categorizing them into three main areas: design-related risks, risks related to human deployment, and operational and cyber risks.
Steele discussed how fintech firms have leveraged AI and machine learning to enhance credit underwriting and expand access to credit. While these advancements have the potential to serve more customers and offer lower-cost alternatives, concerns arise regarding the opacity of AI models and the potential for discrimination.
He stressed that AI models must be transparent to allow organizations and regulators to assess their conceptual soundness and fairness. Steele also pointed out the broader societal surveillance and privacy risks associated with the increasing collection and utilization of consumer data in AI applications.
Turning to the insurance sector, Steele highlighted how AI has the potential to transform various aspects of the industry, including claims processing, underwriting, and fraud detection. However, he cautioned that the use of AI in insurance raises privacy concerns and the risk of unlawful discrimination, particularly in areas like auto insurance that rely on telematics data.
Regarding policymaking, Steele mentioned efforts at both the federal and state levels to address privacy and discrimination concerns related to AI. He noted that policymakers are actively discussing AI regulation and safety standards, with a focus on preventing algorithmic discrimination and ensuring data privacy.
In conclusion, Steele emphasized the importance of responsible innovation and appropriate regulation in the financial services sector, stating, "We are committed to the responsible innovation and appropriate regulation of technologies that are accurate and fair, protect privacy and security, and advance the financial well-being of the American people."