"Banking Regulator Highlights Emerging Risks of AI in Financial Services"

The Office of the Comptroller of the Currency (OCC), a leading federal banking regulator, has issued a warning to financial institutions about the potential risks associated with implementing artificial intelligence (AI) tools. The OCC highlighted various risks, including lack of explainability, reliance on large volumes of data, potential bias, privacy concerns, third-party risk, cybersecurity risks, and consumer protection concerns. While acknowledging the potential benefits of AI adoption, the OCC emphasized the need for banks to manage AI use in a safe, sound, and fair manner, and to identify, measure, monitor, and control risks arising from AI. The agency also stated that existing safety and soundness standards and compliance requirements are applicable to AI usage.