The Soul of a New Machine: Promises and Pitfalls of Artificial Intelligence in Finance

Abstract: After decades of development and many false dawns Artificial Intelligence (AI), in its various guises, finally appears poised for mainstream commercial adoption. The financial sector, in particular, is looking with great interest at a broad range of applications. In April 2021, the European Commission published draft legislation that endeavours to create a comprehensive regulatory framework for the civilian use of AI. With its proposal for an "Artificial Intelligence Act" (AI Act) the Commission aims at striking a balance between the twin objectives of promoting the uptake of AI in the European Union and the need to address the risks associated with some of its uses. To this end the AI Act identifies a number of applications that are either deemed "high risk", and therefore subject to specific requirements and enhanced supervision, or prohibited outright. Only one of the “high risk” applications listed in the initial proposal relates to the financial services sector. This contribution examines other potential intersections between the proposed AI Act and the extensive body of existing financial-sector legislation and seeks to provide an initial assessment of the proposed regulatory framework.

Keywords: Human Side of Service Engineering, Financial Services, Artificial Intelligence, Human-Centric Innovation, Regulatory Policies

DOI: 10.54941/ahfe1002577

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