House Financial Services Committee Chairman Patrick McHenry (NC-10) and six subcommittee chairmen have sent a letter to U.S. Treasury Secretary Janet Yellen in response to the Treasury’s Request for Information (RFI) on Artificial Intelligence (AI) in financial services. The lawmakers emphasize the significant potential AI holds for the sector and urge financial regulators to focus on its benefits to consumers as firms increasingly leverage AI.
The letter states, "We write in response to the Department of Treasury’s Request for Information (RFI) on AI. Earlier this year, the House Committee on Financial Services (Committee) announced the formation of a bipartisan Working Group on Artificial Intelligence (AI) to assess how AI is impacting the financial services sector." The Working Group has examined various issues including new product development, fraud prevention, compliance efficiency, and regulatory tools enhancement. They believe that AI holds great potential for the financial services sector.
The lawmakers highlight current uses of AI in areas such as fraud detection, underwriting, debt collection, customer onboarding, real estate, investment research, property management, and customer service. They note that continued adoption and automation result in cost reductions and greater access to financial services.
Regarding smaller financial institutions, they state that these entities often lack resources or data to build their own AI models and thus rely on third-party solutions. These partnerships enable smaller institutions to offer competitive services without substantial investments.
On data privacy, they mention that advancements in AI make data privacy more critical. The Data Privacy Act of 2023 underscores modernizing data privacy laws so consumers can control their personal information.
Concerning regulatory frameworks for AI, they argue that existing regulations must evolve with technological advancements. They support a principles-based approach rather than broad regulations across all sectors. This would allow primary regulators who understand specific markets to proceed in a technology-neutral manner.
In conclusion, they assert that "AI presents an unprecedented opportunity to transform the financial services sector." They are committed to fostering innovation while protecting consumers and maintaining market integrity through thoughtful regulation and collaboration between public and private sectors.