BOSTON– Four experts on artificial intelligence told a House committee hearing that they remain concerned over the potential for discrimination in AI-based lending decisions due to being trained on data that includes historical inequities toward marginalized communities, even as they expected the technology to continue its surge in usage.
Instead, the four panelists told the House Committee on Financial Services’ Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, titled “Unlocking the Next Generation of AI in the U.S. Financial System for Consumers, Businesses, and Competitiveness,” that if AI is to be deployed in the right way it will require collaboration between regulators, developers and consumers, with emphasis on transparency, explainability and the establishment of regulatory sandboxes with strong consumer protection safeguards.
It’s Not All ‘New’
All of the panelists, along with some members of the subcommittee, pointed out there has been strong growth in both generative artificial intelligence (AI) and agentic AI within financial services.
In his testimony, Gattaca Horizons, LLC CEO Daniel S. Gorfine pointed out that AI in financial services is “not new,” and in fact the industry has been using advanced analytics since the 1980s, primarily focused on investment data analytics, and then later fraud detection in the 1990s.
Dr. Nicol Turner Lee, director of the Center for Technology Innovation at the Brookings Institution, stated in his written testimony that the financial sector’s spending on AI is expected to grow to $97 billion by 2027, up from $35 billion in 2023.
‘Careful Oversight’
During Q&A, Gorfine later said that the recent rapid expansion of capabilities, including the development of large language models (LLMs) and agentic AI, will require careful oversight.
Dr. Christian Lau, co-founder and president of Dynamo AI, told the committee identifying AI use cases is the easy part—he said hundreds have already been identified. The challenge, he said, is in governance, adding that those use cases frequently fail to make it into production because “financial institutions struggle to answer open questions about managing AI risk in heavily regulated environments.”
To move forward, policymakers and regulators must clearly signal “both the innovation they want to encourage and the risks they consider most important to address,” Lau told the committee.
Chatting About Chatbots
Not surprisingly, attention during the hearing turned to chatbots, which many financial institutions, including credit unions, have already deployed, especially to automate calls to call centers and to at least begin online chat.
All four of the witnesses were in general agreement that AI-powered chatbots can improve efficiency, but it also raises risks related to compliance and security.
Dr. David Cox, vice president for AI models at IBM Research, shared in his testimony how financial firms are successfully deploying these tools to improve customer relations.
According to Cox, they are using “IBM-enabled chatbots and natural language systems to deliver faster, more personalized customer service,” which allows clients to interact using non-technical language, instantly resolving routine queries “while freeing human representatives for more complex cases.”
