8 key considerations for Board of Directors on Artificial Intelligence in Banking
1) Business strategy: Boards should consider how AI can be used to support the bank's business strategy and goals, and how it can be integrated into existing processes and systems, like customer service chatbots, fraud detection, credit risk assessment or personalized service offering
2) Governance and oversight: Banking Boards should establish clear governance structures and processes to oversee the development and deployment of AI, including defining roles and responsibilities, setting performance metrics, and establishing risk management procedures. Given the dynamics of AI and the need for constant calibration and validation of AI models boards need to establish a frequent model oversight process.
3) Talent and skills: AI requires specialized skills and knowledge, and boards should ensure that the bank has the necessary talent and resources trained in both banking and AI to develop and implement AI initiatives.
4) Legal and regulatory compliance: It is important for the board to ensure that the use of AI in the banking industry complies with all relevant laws and regulations. This includes data protection laws, consumer protection laws, digital operational resilience act, and any other laws that may be relevant to the use of AI in the banking industry.
5) Data and data privacy: The use of AI in the banking industry often involves the collection and processing of large amounts of sensitive data. The board should consider how this data is collected, stored, and used, and ensure that appropriate measures are in place to protect the privacy of customers and other stakeholders. All AI models are dependent on high quality data. There is the risk of garbage in, garbage out. Therefore, boards must provide framework conditions that ensure robust and high data quality.
6) Ethical considerations: The use of AI in the banking industry can raise ethical concerns, such as the potential for bias in decision-making or the impact on employment. The board should consider these ethical concerns and ensure that the use of AI is consistent with the values and mission of the organization.
7) Risk management: The use of AI can introduce new risks to the banking industry, such as the risk of biased decision-making or the risk of data breaches. The board should consider these risks and ensure that appropriate measures are in place to mitigate them.
8) Transparency: It is important for the board to be transparent about the use of AI in the banking industry and to ensure that customers and other stakeholders are informed about how AI is being used. This may include providing information about how decisions are made and what data is being collected and used.
Finally, AI training for board members is recommended to make them knowledgable about the concepts, methods, needs, challenges and risks.