On April 29, Acting Comptroller of the Currency Rodney Hood made pre-recorded remarks at the National Fair Housing Alliance’s Responsible AI Symposium.
In his speech, Hood stressed the Office of the Comptroller of the Currency (OCC)’s dedication to the responsible application of artificial intelligence (AI) within the banking industry. He also brought attention to the agency’s wider initiatives aimed at promoting financial inclusion.
Hood elaborated on several significant OCC initiatives regarding the responsible use of AI in banking. First, the OCC has established a risk-based oversight framework. The OCC has issued guidance to ensure transparency, accountability, and fairness when using AI in the financial services sector.
Hood pointed out that the principles for governing AI should be the same risk-based and technology-neutral ones applicable to other banking activities. This means that just like other aspects of banking, AI usage in financial services must be regulated in a way that assesses and manages risks properly.
Second, the OCC encourages traditional risk management practices for AI. Given the complexity of AI, which involves the use of large data sets and complex algorithms, banks are required to apply established model risk management principles to AI tools. This helps to prevent potential risks associated with AI in banking, such as incorrect data analysis or algorithmic bias.
Third, the OCC supports leveraging AI to expand access to credit. It endorses the use of alternative data like rent and cash flow information. By doing so, it can improve credit modeling and increase financial inclusion, allowing more people who might have been previously excluded from the credit market to access financial services.
Fourth, the OCC’s Office of Financial Technology plays a role in supporting innovation through internal infrastructure. It keeps an eye on developments in financial technology, including AI adoption and bank-fintech partnerships, and also contributes to the development of supervisory policies in these areas.
Hood also talked about Project REACh (Roundtable for Economic Access and Change). This is an OCC-led initiative that unites banking, community, and technology stakeholders. It aims to expand affordable credit access.
Project REACh has already supported pilot programs that have helped create over 100,000 accounts for consumers who previously couldn’t access credit. New workstreams under this project are focused on removing barriers to homeownership and exploring strategies for tech-driven inclusion.
In conclusion, the OCC’s continuous efforts to promote the responsible use of AI highlight the federal government’s greater commitment to making sure that AI is safely and equitably integrated into the financial services sector.
As AI is expected to play an increasingly important role in financial services, market participants should anticipate further developments in the regulation of AI applications and the use of alternative data in credit decision-making at both the federal and state levels.
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