‘Balanced and flexible’ approach to AI will aid innovation, protect consumers
To facilitate continued credit union innovation in the artificial intelligence (AI) space, Congress and regulators should take a balanced and flexible regulatory approach to risk management that accommodates innovation while protecting consumers. America’s Credit Unions wrote to the House Financial Services Committee in advance of today’s hearing on enabling AI innovation in financial services outlining the specifics of such an approach.
The approach should include tailoring future actions related to AI in a way that distinguishes between the use of AI technology by regulated versus unregulated institutions. For credit unions, an appropriate regulatory framework should “recognize the need for less prescriptive intervention and greater accommodation of innovation through pilot programs, no-action letters, waivers, and elimination of outdated rules.”
The letter also offers comments on legislation before the committee, which includes:
- The Unleashing AI Innovation in Financial Services Act (H.R. 4801) would create regulatory sandboxes for AI test projects at financial regulatory agencies. America’s Credit Unions supports this bill;
- The Artificial Intelligence Practices, Logistics, Actions, and Necessities (AI PLAN) Act (H.R. 2152) would require the Secretaries of the Treasury, Homeland Security, and Commerce to develop a strategy to defend against national security risks posed by AI in financial crime. America’s Credit Unions supports this bill, and encourages it to be expanded to include a role for functional financial regulators such as the NCUA; and
- A draft resolution to promote the use of AI in financial services and housing, given that it acknowledges the resource limitations faced by many smaller rural and community-based financial institutions and emphasizes the need for tailored regulation and highlights the need for cost-benefit analysis before regulators undertake AI-specific rulemakings.
Additionally, the letter urged further examination on a couple of other bills noticed for the hearing based on how they could impact smaller credit unions and the NCUA before moving forward.
America’s Credit Unions has been leading the engagement with Congress on the AI issue for credit unions, having testified before the committee on the issue when the association testified last year.