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Cited by 177Digitalization, Law, and RegulationFinTech, Crowdfunding, Digital FinanceEthics and Social Impacts of AI

Banking on AI: mandating a proactive approach to AI regulation in the financial sector

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Truby, Jon, Brown, Rafael, Dahdal, Andrew·2020·Law and Financial Markets Review
DOI 10.1080/17521440.2020.1760454
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Abstract

Despite an emerging international consensus on principles of AI governance, lawmakers have so far failed to translate those principles into regulations in the financial sector. Perhaps, in order to remain competitive in the global race for AI supremacy without being typecast as stifling innovation, typically cautious financial regulators are unusually allowing the introduction of experimental AI technology into the financial sector, with few controls on the unprecedented risks to consumers and financial stability. Once an unregulated AI software causes serious economic harm, a public and regulatory backlash would lead to over-regulation that could harm innovation of this potentially beneficial technology. Artificial intelligence is rapidly influencing the financial sector with innumerable potential benefits, such as enhancing financial services and improving regulatory compliance. This article argues that the best way to encourage a sustainable future in AI innovation in the financial sector is to support a proactive regulatory approach prior to any financial harm occurring. This proactive approach should implement rational regulations that embody jurisdiction-specific rules in line with carefully construed international principles.

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  • Existe un consenso internacional sobre los principios de la gobernanza de la IA, pero los legisladores no han logrado traducir esos principios en regulaciones para el sector financiero.

    “De acuerdo con Truby et al. (2020), existe un consenso internacional sobre los principios de la gobernanza de la IA, pero los legisladores no han logrado traducir esos principios en regulaciones para el sector financiero.”

    From Hacia una normativa sobre la inteligencia artificial (IA): consideraciones clave y regulaciones internacionales (2024) · cites this paper as Truby et al. (2020)

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Research works printed but not linked: 6

  1. S Legg and M Hutter, "A Collection of Definitions of Intelli- gence," arXiv, June 15, 2007, https://arxiv.org/pdf/0706. 3639.pdf.
  2. NJ Nilsson, The Quest for Artificial Intelligence: A History of Ideas and Achievements (Cambridge University Press 2010).
  3. C Goodhart, P Hartmann, D Llewellyn, L Rojas-Suarez, and S Weisbrod, Financial Regulation: Why, how and where now? 2 (Routledge: 1998). 23 Ibid. 24 CK Whitehead, Reframing Financial Regulation, 90 (Boston Univ. L. Rev. 6 2010) (arguing that financial markets have begun to bypass traditional business categories that largely frame financial regulation due to convergence in the products and services, new market entrants, and a shift in capital-raising and risk-bearing from traditional intermediation to the capital markets);
  4. J Black, Restructuring Global and EU Financial Regu- lation: Character, Capacities, and Learning 1.06 in E Wymeersch, KJ Hopt, and G Ferrarini (eds.), Financial Regulation and Supervi- sion: A Post-Crisis Analysis (Oxford University Press 2012).
  5. See also, DA Zetzsche, DW Arner, RP Buckley, and B Tang, Artificial Intelligence in Finance: Putting the Human in the Loop (Feb- ruary 2020). CFTE Academic Paper Series: Centre for Finance, Technology and Entrepreneurship, no. 1. Available at SSRN: https://ssrn.com/abstract= at p.17.
  6. Bharadwaj, op. cit. n 4. 38 Deloitte, The New Physics of Financial Services: How Artificial Intel- ligence Is Transforming The Financial Ecosystem, available in pdf at https://www2.deloitte.com/qa/en/pages/financial-services/ articles/artificial-intelligence-transforming-financial-ecosystem- deloitte-fsi.html (accessed 9 Sept 2019) (Companies like Comply Advantage, for example, use AI-based algorithms to monitor transactions).

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Authors
Truby, J., Brown, R., & Dahdal, A.
Affiliations
Qatar University (QA)
ORCID
Venue
Law and Financial Markets Review
Publisher
Informa UK Limited
Published
2020-04-02
Volume
14
Issue
2
Pages
110-120
ISSN
  • 1752-1440 (ISSN-L)
  • 1752-1459
DOI
10.1080/17521440.2020.1760454
OpenAlex
W3024628422
Cited by
175
References
0
Citations by year
2026: 18 · 2025: 52 · 2024: 50 · 2023: 32 · 2022: 14 · 2021: 7 · 2020: 2
FWCI
89.93
Type
journal article
Language
en
Open access
Licence
Locations
  • Law and Financial Markets Review (publishedVersion, cc-by)
  • SSRN Electronic Journal (submittedVersion)
  • Figshare (submittedVersion, cc-by)
  • Qatar University QSpace (Qatar University) (submittedVersion)
Funders
Qatar National Research Fund
Topics
  • Social Sciences › Law › Digitalization, Law, and Regulation
  • Social Sciences › Business, Management and Accounting › Management Information Systems › FinTech, Crowdfunding, Digital Finance
  • Social Sciences › Safety Research › Ethics and Social Impacts of AI
Keywords
AI regulation, financial services, proactive regulation, financial stability, consumer protection, innovation and regulation, international regulatory cooperation, financial regulation

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