Understanding Artificial Intelligence in Financial Services

Media Release
MR No. 2024 - 39

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko - has today published research on the use of Artificial Intelligence (AI) in New Zealand's financial services sector.

The research, undertaken as part of the FMA's occasional paper series, draws on responses from financial service providers in asset management, banking, financial advice and insurance.

FMA Chief Economist, Stuart Johnson, says, "We reviewed how AI is currently used in New Zealand financial services and firm's plans for future applications. We sought to understand both the benefits and the risks to inform more oversight.

"AI is a transformative technology, and application is evolving at pace. As financial services integrate AI, understanding its potential and limitations is crucial. Our findings emphasise the need for a balanced approach to harness AI's benefits while addressing governance and risk concerns.

"We are aware that AI adoption in financial services offers significant opportunities but also presents emerging risks. Our research shares how institutions are beginning to navigate these challenges and the importance of robust governance structures.

"Our focus on AI governance and risk management reflects our commitment to ensuring that financial innovations are introduced responsibly. By understanding current practices and future directions, we aim to support a balanced regulatory approach."

Effective AI integration requires careful consideration of data quality, technology choice, and documentation. Our research underscores these aspects as critical for minimising risks and ensuring ethical use.

"The FMA is technology-neutral and pro-innovation. We believe that New Zealanders should have access to the same technological advancements as those in other countries. We want to see firms leverage AI to improve consumers' experiences in financial markets and services. We are pleased that ourdiscussions with stakeholders have revealed that firms are adopting AI with the goal of improving customer outcomes."

The FMA will host a roundtable on 1 October 2024 with the study participants to further explore how AI and GenAI is being used in New Zealand's financial services and how firms are managing risks.

Download Understanding Artificial Intelligence in Financial Services Research PDF

View the research page to listen to the Podcast and read the transcript

ENDS

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