Treasury seeks information on AI uses and risks in the financial sector

The Treasury Department is seeking public feedback from financial institutions, consumers, academics, advocates and other industry stakeholders on the uses, opportunities and risks posed by artificial intelligence as part of an ongoing agencywide exploration of the technology’s potential.

The request for information, released Thursday, asks for comments on advancements in existing AI tools and on emerging AI technologies that can benefit the financial sector. The RFI has specific callouts for information on the use of AI in financial products and services, risk management, capital markets, internal operations, customer service, marketing and regulatory compliance. 

“Treasury is proud to be playing a key role in spurring responsible innovation, especially in relation to AI and financial institutions. Our ongoing stakeholder engagement allows us to improve our understanding of AI in financial services,” Under Secretary for Domestic Finance Nellie Liang said in a statement. “The Biden administration is committed to fostering innovation in the financial sector while ensuring that we protect consumers, investors, and our financial system from risks that new technologies pose.”

Treasury listed 19 questions, plus numerous follow-ups, for respondents within its RFI, including: asking for feedback on any AI models that financial institutions are currently using; whether AI use cases differ within institutions; what barriers small banks face in AI deployment; how AI has benefited low-to-moderate income consumers and/or underserved individuals and communities; the extent to which AI models are developed in-house, by third parties or via open-source code; and how industry is applying risk management frameworks to AI use.

During remarks Thursday at the Financial Stability Oversight Council Conference on Artificial Intelligence and Financial Stability in Washington, D.C., Treasury Secretary Janet Yellen touted the release of the RFI as a way of “continuing our stakeholder engagement to improve our understanding of AI in financial services.” Yellen also announced a future roundtable discussion, convened by Treasury’s Federal Insurance Office, on the benefits and challenges of AI use for insurers. 

“FSOC will continue its efforts to monitor AI’s impact on financial stability, facilitate the exchange of information, and promote dialogue among financial regulators,” Yellen said. “Given how quickly AI technology is developing, with fast-evolving potential use cases for financial firms and market participants, scenario analysis could help regulators and firms identify potential future vulnerabilities and inform what we can do to enhance resilience.”

Much of Treasury’s RFI is informed by the agency’s previous work on AI, including a March report that sounded the alarm on AI-specific cybersecurity risks to the financial sector. Just last month, the department issued a national strategy for combating terrorism and other illicit financing, which called out the benefits AI might have in winning that fight.

Closer to home, Treasury has experimented with its own AI use cases, while also engaging in public-private partnerships to ensure that smaller financial institutions have the same defensive AI capabilities as the country’s biggest banks.