FINRA AI Virtual Conference: Will AI ever make critical decisions?

In light of the coronavirus pandemic, the US’s FINRA has this year moved its AI conference online. In its latest session, ‘Industry Views on the Current and Future State of Artificial Intelligence’, FINRA spoke to experts working with AI to discuss the opportunities and challenges that it presents. Following the event, CUBE unpicked two stand out topics covered by FINRA’s panel: data and decision making.

Why is data key to artificial intelligence?

Speaking in the session, Head of Fidelity Labs, Mona Vernon noted that “data is incredibly important” to AI. This idea is not necessarily new but is certainly becoming better understood by the broader industry. Firms could invest limitless funds into an artificial intelligence system or regulatory technology, but if the data that feeds it is poor – then the outcome will be equally poor. Garbage in = garbage out.

As Vernon highlighted, firms need to be aware that a precondition of an effective AI-based model is “the investment and time required or create the data that feeds those tools in this model so that you can glean impactful insights”. Robust data sets, data integrity and the governance structure that surrounds that data is “the essential factor for success”.

The plus side, of course, is that once a system is in place whereby you have high-quality data and an AI that can effectively read and learn from that data, firms will be able to automatically glean meaningful insights from vast data sets in less time – with less room for human error or inefficiencies.

Will AI make decisions?

One question of particular interest within the session was posed by the host, Haime Workie of FINRA’s Office of Financial Innovation. He asked whether AI systems are generally making decisions for themselves, or whether they’re more of a tool to help humans make decisions. This is an area which, historically, has opened the floor to debate around AI becoming autonomous and overthrowing its creators.

Responding, SIFMA’s Managing Director and Associate General Counsel, Melissa MacGregor, noted that while “AI systems are not generally being used to make critical decisions” at this juncture, “we will probably see more advances in this area, and we’ll likely see more decision making”. This could mark an exciting turning point, especially for compliance systems. At present, AI is used most frequently to assist with routine functions or administrative tasks, “allowing firms to deploy the human resources in ways that are more effective and efficient”.

That is not to say, however, that humans would become superfluous. As MacGregor noted, “AI will only enhance what our firms are doing from compliance and business platforms”, humans are – and will remain – necessary.

CUBE comment

FINRA continues to show itself as a regulatory body with its sights set firmly on innovation, especially artificial intelligence, as demonstrated by this virtual conference.

Of course, CUBE is acutely aware of the benefits that artificial intelligence and world-class automation can provide for financial institutions. It is reassuring to hear that regulators are similarly opening their eyes to the potential too. AI presents a wealth of exciting applications across compliance, from cybersecurity to financial crime – from identifying malicious behaviours hidden within the data sets to leveraging data to create meaningful insights into regulatory obligations and compliance gaps. We look forward to playing a part in the exciting evolution of AI in 2021 and beyond.