Trends and policy frameworks for AI in finance

Compared to many other sectors, AI is being diffused rapidly in the financial sector. This creates opportunities but also raises distinctive policy issues, particularly with respect to the use of personal data and security, fairness and explainability considerations.This chapter introduces AI and its applications in finance and proposes three complementary frameworks to structure the AI policy debate in this sector to help policy makers assess the opportunities and challenges of AI diffusion in this sector. One approach assesses how each of the ten OECD AI Principles applies to this sector. A second approach considers the policy implications and stakeholders involved in each phase of the AI system lifecycle, from planning and design to operation and monitoring. A third approach looks at different types of AI systems using the OECD framework for the classification of AI systems to identity different policy issues, depending on the context, data, input and models used to perform different tasks. The chapter concludes with a stocktaking of recent AI policies and regulations in the financial sector, highlighting policy efforts to design regulatory frameworks that promote innovation while mitigating risks.