Fed Vice Chair urges banks to follow new AI guidance for inclusion
U.S. banks must consider the Financial Stability Board's AI consultation as supervisory expectations, with comments due by July 22
Vice Chair for Supervision Michael Bowman addressed the Board's third annual Financial Inclusion Conference, emphasizing that responsible artificial-intelligence (AI) adoption is central to expanding access to credit and other financial services. He reiterated the Federal Reserve's role in setting clear expectations while leaving innovation decisions to individual banks.
Bowman noted that AI can broaden credit availability for low- and moderate-income consumers, but that its use in credit decisions raises "more substantial legal compliance challenges" than other applications. He called for banks to integrate AI risk considerations into existing risk-management frameworks and to tailor controls to the specific risks each AI use case presents.
The speech highlighted the Financial Stability Board's "Sound Practices for Responsible Adoption of Artificial Intelligence (AI)" consultation report, published earlier this month. The report offers practical, non-prescriptive guidance drawn from real-world examples and invites public comment through July 22. Bowman said the report reflects a balanced view of AI's benefits and the supervisory safeguards needed to protect safety and soundness.
Fed supervisors will focus on "lower-risk uses of AI" with a calibrated supervisory touch, while ensuring that guidance does not impede smaller banks that may lack the resources of larger institutions. The emphasis is on flexibility, allowing banks to develop, implement, and manage AI in line with their unique structures, businesses, and cultures.
In closing, Bowman linked responsible innovation directly to financial inclusion, warning that overly complex or prescriptive rules could stifle the very advances that broaden access to affordable financial services for more Americans.