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The regulator confirmed it will continue to look into how AI is being applied in regard to lending.
Chair of the Australian Securities and Investments Commission (ASIC), Joe Longo, said in a speech at the ISDA/AFMA Forum on 20 June 2023 that ASIC intends on looking into the role artificial intelligence (AI) has to play in lending, consumers, small business, and the economy as a whole.
Mr Longo stated ASIC will “scan the environment” in order to understand how AI is being applied along with the risks and opportunities associated with those methods of application along with other developments in lending, crypto tech, digitisation of assets, carbon markets, and FX.
“To be clear, my and ASIC’s interest is — and will always be — the safety and integrity of the financial ecosystem,” Mr Longo said.
“As with any new technology, to the extent that AI affects that ecosystem, to that extent we will be involved.
“As we realise the potential of tech, we have to do all we can to avoid negative disruption, learned market abuse, misinformation, discrimination, and bias — whether intended or unintended.”
Representatives from ASIC, along with three senior representatives from the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) recently sat in on a panel discussion hosted by the Australian Banking Association (ABA) where they agreed that AI was the biggest emerging challenge for the financial system.
Mr Longo said during the panel that ASIC is studying how AI could “manifest” in new forms of misconduct and harm for investors, consumers, and regulators.
“We’ve all heard of the black box and underlying all of this are algorithms for someone else to explain how they work, how the variables interrelate to one another,” he said.
“So that’s a huge challenge that’s happening right now, in various sectors.”
AI to protect against fraud
Speaking at the AI conference H2O World, the Commonwealth Bank of Australia’s (CBA) Dr Andrew McMullan explained how the bank was leveraging AI to improve customer experience and prevent fraud.
Mr McMullan said in many instances, the bank is able to solve complex problems because of AI, in ways that are more sophisticated and effective than we were previously able with humans alone.
For example, the AI-driven capability to analyse millions of customer documents, which would be an immensely time-intensive task for a human.
“But AI can rapidly read even hard-to-read documents and ultimately provide an easier, faster, and more accurate experience for customers,” Mr McMullan said.
With the introduction of initiatives such as NameCheck, CBA has already started using AI to detect and prevent fraud in real time.
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