Use of AI by Financial Players: The Emerging Evidence

Abstract

Financial supervisors as well as financial intermediaries increasingly rely on AI. However, little remains known about the scope and pervasiveness of this evolution.

There is emerging evidence of financial supervisors relying on AI to monitor financial intermediaries. Using annual reports as a benchmark, we show that the European Central Bank as well as French and German financial supervisors started referring to AI-use in 2017, with their principal brethren following up in 2018 and 2019. However, the provision of AI-specific information dried-up in 2020 and 2021.

There is also evidence of financial intermediaries using AI for risk management and compliance purposes. This is especially noticeable in the contractual, litigation and sentencing areas. However, the available data remains circumstantial, making it hard to quantify the magnitude of this evolution.

Keywords: compliance, financial supervision, investor protection, systemic risk, use of artificial intelligence.

JEL Classification: G18, K20, K22, K40, L22