Artificial Intelligence

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This Wednesday, September 20th at 10:00AM ET, the U.S. Senate Committee on Banking, Housing, and Urban Affairs is scheduled to hold a hearing on “Artificial Intelligence in Financial Services.” Currently scheduled to speak are: Ms. Melissa Koide, Director and CEO, FinRegLab, former Deputy Assistant Secretary for Consumer Policy, U.S. Department of the Treasury; Mr.… Continue Reading

The California Privacy Protection Agency (CPPA) recently published two new sets of draft regulations addressing a range of cutting-edge data protection issues.  Although the CPPA has not officially started the formal rulemaking process, the Draft Cybersecurity Audit Regulations and the Draft Risk Assessment Regulations will serve as the foundation for the  process moving forward. … Continue Reading

We first look at what generative AI is and how it differs from other types of AI and technology such as machine learning.  We then look at the ways in which banks and fintech companies can deploy AI tools and the business use case for banks and fintechs considering the addition of chatbots, including how chatbots differ from voice response units. … Continue Reading

On June 28, a group of plaintiffs filed a class action lawsuit against OpenAI—creator and publisher of the generative artificial intelligence (AI) tool ChatGPT—as well as OpenAI’s primary investor, Microsoft.  The 151-page complaint is the first significant U.S. class action to assert that generative AI tools violate consumer privacy rights.

The Complaint, filed in the Northern District of California, challenges the core of the generative AI models. … Continue Reading

A group of four Democratic members of the Senate Banking Committee, including Chairman Sherrod Brown, recently sent a letter to CFPB Director Chopra to express their concerns regarding the emergence of voice cloning technology and its potential exploitation in financial scams.  The Senators ask the CFPB to “review the risks posed by this new technology as soon as practicable and take action under the CFPB’s existing authorities to protect consumers.”… Continue Reading

On June 16, 2023, Michael J. Hsu, Acting Comptroller of the Currency delivered remarks to the American Bankers Association Risk and Compliance Conference in San Antonio, Texas.  In his remarks, Hsu discussed both the benefits and risks of artificial intelligence (“AI”) and tokenization.  The core of Hsu’s remarks is that, given the rapid innovation of AI and tokenization in banking, banks should closely work with regulators to manage technological risks.… Continue Reading

In a new “Issues spotlight” titled “Chatbots in consumer finance,” the CFPB discusses how chatbot technologies are being used by financial institutions and the limitations and risks of such technologies.  The report, which is part of a concerted focus by the CFPB on the use of artificial intelligence and machine learning in consumer financial services, comes on the heels of the recent joint agency statement regarding enforcement efforts “to protect the public from bias in automated systems and artificial intelligence.” … Continue Reading

Following recent Senate testimony in which OpenAI CEO Sam Altman proposed additional Congressional oversight for the development of artificial intelligence (AI), Colorado Senator Michael Bennet has re-introduced the Digital Platform Commission Act, a bill that would enable the creation of a federal agency to oversee the use of AI by digital platforms. … Continue Reading

The CFPB, FTC, Justice Department, and Equal Employment Opportunity Commission have issued a joint statement about enforcement efforts “to protect the public from bias in automated systems and artificial intelligence.”  The CFPB also issued a separate press release and prepared remarks by Director Chopra about the statement.  In the press release, the CFPB indicated that it “will release a white paper this spring discussing the current chatbot market and the technology’s limitations, its integration by financial institutions, and the ways the CFPB is already seeing chatbots interfere with consumers’ ability to interact with financial institutions.”… Continue Reading

Our discussion focuses on generative artificial intelligence, a new and emerging category of AI.  We first discuss what generative AI is, its use of large language models, and the role of supervised training in developing generative AI models.  We then discuss the potential benefits and limitations of generative AI in the following use cases in the consumer finance industry: marketing, fraud management, underwriting, collections, customer service, and back office functions. … Continue Reading