digital identities, financial services organisations should leverage this level of acceptance – and even preference – by looking at ways to implement this technology. We know that the use of digital identities already provides a higher level of fraud prevention, but it could also improve customer acquisition and drive business growth. Impact of EU AI Act on financial sector firms The European Union AI Act is a proposed legislation aimed at regulating the use of artificial intelligence in the EU. The draft legislation outlines a risk-based classification of AI systems and provides a certification framework. The Act has been agreed upon by the European Council and is set to be voted on by the European Parliament in April 2023. If passed, financial services firms will likely have to ensure their AI systems meet the necessary standards of safety, transparency and ethical considerations outlined. Itmay impact areas inwhichfinancial organisations employ the use of AI, such as credit scoring, insurance underwriting and fraud detection, meaning they will potentially have to conduct safety assessments and implement transparent decisionmaking processes for the AI systems being used. Considering the ethical implications, such as the potential for perpetuating biases or discrimination, would become a requirement. Firms should take a proactive approach to ensure compliance with the proposed EU AI Act as it represents a significant development in AI regulation that could have far-reaching implications for many industries, financial services no exception. By taking steps to understand the requirements of the EU AI Act now and planning how to address them, organisations can set themselves up for success in an increasingly regulated landscape. As new challenges present themselves, so too do newsolutions. Technology is at the core of this and it’s important for financial services firms to stay ahead of the curve and embrace new solutions to meet the changing landscape. The future is full of possibility, and we can expect to see continued growth and innovation in 2023 to realise the potential that lies ahead. “In 2023, it is expected that the number of transactions made through digital identities will surpass those made through traditional credit and debit cards”. The European Union AI Act is a proposed legislation aimed at regulating the use of artificial intelligence in the EU. Finance Monthly. 17 Bank i ng & F i nanc i a l Se r v i ce s
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