Responsible by Design: Five Principles for Generative AI in Financial Services

As financial service institutions embrace generative artificial intelligence (AI) models and witness the rapid adoption of this technology by consumers, it has become imperative for companies to understand the risks and opportunities associated with it. While managing and mitigating risks is not new for financial institutions, the introduction of generative AI brings forth both familiar concerns and novel challenges.

One significant risk is the potential for bias in AI applications. Previously, bias was managed through fairness policies and compliance efforts. However, with generative AI, there is a possibility that bias could unknowingly be embedded into applications based on these models. The extent of risk faced by each company will depend on how and where they implement generative AI, as well as the maturity of their AI governance framework.

To effectively navigate these risks, companies utilizing generative AI must proactively identify emerging risks, align their applications with existing and upcoming regulations, and strengthen internal functions such as machine learning engineering, technology, and legal expertise. By doing so, they can ensure responsible and ethical use of generative AI in the financial services sector.

Request a demo to see how LOQUAT Inc. is leveraging AI and ML: