OECD and FSB roundtable explores AI’s growing role in finance

Posted on October 7, 2024 by Editor

In May 2024, the Organisation for Economic Co-operation and Development (OECD) and the Financial Stability Board (FSB) hosted a roundtable on the adoption of AI in finance, bringing together experts from both the public and private sectors. Discussions focused on the opportunities AI presents, as well as the risks it introduces to the financial industry. The roundtable highlighted use cases and emerging best practices for policy frameworks to ensure AI's safe and effective deployment.

AI is increasingly being used by banks, insurers, and asset managers, particularly in areas like risk modelling, fraud detection, and financial crime prevention. The consensus from the roundtable was that, at least for now, AI's role in finance is not transformational, especially for highly regulated institutions. Instead, AI is mainly being used for operational efficiency gains, with its most notable contribution being the improved handling of large data sets.

From our perspective, AI has real value in its synergy with structured data. As we've pointed out before in this newsletter, using standardised data formats like XBRL helps build more reliable AI models. Structured data is essential for training a range of AI models, leading to better results, and giving AI a solid foundation for delivering more accurate insights.

At the same time, the roundtable underscored the challenges that come with AI adoption, including risks related to model accuracy, data protection, governance, and potential impacts on financial stability. Complex AI models can increase the opacity of financial systems, raising concerns about transparency, ethical standards and the ability of financial institutions to monitor risks and control certain kinds of transactions as these tools get further embedded into trading and capital allocation.

As AI's role in finance evolves, the focus must be on balancing innovation with strong governance to ensure that both efficiency and integrity are maintained.

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