Bowman details AI sound practices, seeks feedback

Vice Chair Bowman highlighted the rapid evolution of artificial intelligence and its expanding use by financial institutions.

The FSB's consultation report, a U.S. G-20 deliverable, aims to establish sound practices for responsible AI adoption, building on nearly a decade of Federal Reserve monitoring of bank AI usage.

The report describes how financial institutions, including banks of all sizes, are already successfully managing AI use risks, with the broader goal of fostering responsible innovation that benefits both institutions and their customers.

Bowman thanked Hern Shin Ho from the Monetary Authority of Singapore for leading the FSB work stream and acknowledged collaboration with U.S. colleagues at the Treasury and the SEC.

A central element of the FSB report is understanding specific AI use cases and their materiality to business operations or legal and regulatory obligations.

Bowman noted that this understanding should inform the type and intensity of governance and controls applied, advocating for a lighter supervisory touch for lower-risk AI uses.

The report also emphasizes proportionality, recognizing that practices appropriate for larger institutions with complex AI applications may not suit smaller institutions.

Bowman welcomes feedback on whether the report strikes the appropriate balance on proportionality, ensuring it promotes innovation across all financial institutions.