Artificial Intelligence in Financial Services: New Risks and the Need for More Regulation?

Abstract

In this chapter, Mathias Paul explores the topic of AI systems in the financial industry. After outlining different areas of application of AI in the financial sector and different regulatory regimes relevant to robo-finance, the author analyses the risks emerging from AI applications in the financial industry. He argues that AI systems applied in this sector usually do not create new risks. Instead, existing risks can actually be mitigated through AI applications. The author then analyses personal responsibility frameworks that have been suggested by scholars in the field of robo-finance, and shows why they are not a sufficient approach for regulation. He concludes by discussing the Draft AI Act proposed by the European Commission as a suitable regulatory approach based on the risks linked to specific AI systems and AI based practices.