Supervisors Symposium

B A N K S A N D A R T I F I C I A L I N T E L L I G E N C E

Why do Bank Regulators Need to Concern Themselves with AI Matters? ● With respect to the “back of the house,” bankers and bank supervisors should be concerned whether the AI model and related technology is validated in a manner to avoid bias. ● Any such model involving the review of a consumer’s creditworthiness needs to comply with consumer credit laws to not discriminate when the bank is relying on the data analysis to determine whether to extend credit. ● If credit is not extended, or credit is proposed to be extended on different terms than requested in the application, then FCRA/ECOA and Reg B provisions may be triggered and require further notice and communication to the prospective borrower.

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W H A T A B O U T N E W S T R E S S E S O N B A N K M A N A G E M E N T ?

Bank regulators are likely to see shrinking bank employment from middle manager employees who had handled underwriting processes, trading processes, and other quantitative tasks.

AI and machine learning will displace employees from those jobs so that there will be a smaller professional complement of personnel to review and be involved with oversight and judgment but far fewer bank employees.

By contrast, there will be a greater number of bank employees hired as IT/computer analysts, programmers, systems administrators and other tech related jobs.

Bank regulators always need to assure themselves that the management team in place is capable of assessing and managing the risk associated with the business plan of a specific bank.

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