WASHINGTON, D.C., September 26, 2023 – U.S. Senator Katie Britt (R-Ala.) during a recent hearing of the Senate Committee on Banking, Housing, and Urban Affairs expressed the importance of strategically developing frameworks to regulate rapidly developing technologies, like artificial intelligence (AI), in a manner that facilitates American innovation and technological dominance while establishing proper guardrails that protect consumers.
Additionally, Senator Britt noted the impact of AI on individuals, small businesses, and industry in the state of Alabama, as well as crucial uses of AI in military operations. She stressed the importance of utilizing AI to reach underserved communities and gained insight into ensuring harder-to-reach individuals are able to benefit from newer technology, specifically in the retail banking space.
A transcript of Senator Britt’s remarks from the hearing follows:
BRITT: Thank you, Mr. Chairman. Technological innovations and the use of artificial intelligence and machine learning spaces have just emerged all over our nation and in various sectors. For instance, in Alabama, we’ve seen examples of positive capabilities of AI and how it can help enable effective military operations. I am particularly proud of the work that goes on there in the defense and the intelligence community.
The role AI plays in financial services directly impacts individuals and small businesses in my great state of Alabama and across the country each and every day. And while it has received significant attention, only in recent weeks in Washington, D.C., many in the financial industry have been using this type of technology for years. Not only have banks and insurers utilized these capabilities of AI and their underwriting practices and risk management, but you have also seen a history of mature AI governance that can be a model for other industries to use.
There have been calls from some of my colleagues to what I believe amounts to overregulation of the industry. I believe, as legislators, we should take a more strategic look at this and be very thoughtful about how we approach a governance framework for any type of emerging technology, being sure that appropriate guardrails are in place that allow for innovation and enable positive use cases, while mitigating potential risk. To do so, it’s important we continue to have these types of conversations we’re having today so that we can learn how AI is helping customers to access financial services that they may otherwise not be able to access and to recognize that, like in many spaces, that bad actors find a way to utilize these things in a way that we hope to be able to curtail.
So, my first question is for you, Mr. Gorfine. How should we properly balance the strong capabilities of AI to help improve fraud detection and cybersecurity while managing the fact that these technologies can and have been used by bad actors?
Mr. DANIEL GORFINE: Yes, thank you, Senator, for the question, and I think that’s absolutely right. I think one of the more promising areas of artificial intelligence is in this reg tech space, regulatory technology. There’s incredible potential to, in terms of market surveillance, trade surveillance, that certainly capital market’s regulators are able to deploy.
There’s also anti-money laundering and other type of financial crime tools and technologies that are being developed that are far better at identifying anomalies, patterns that traditional analytic tools wouldn’t be able to use. So, I think that there’s an opportunity for government – regulators are able to use this, law enforcement’s able to use this, and the private sector is able to use it. The first line of defense will typically be, whether it’s exchanges or banks that deploy these types of reg tech tools, to more effectively and efficiently find bad actors and look for fraudulent or manipulative activities.
You know, on the flip side, absolutely, as we’ve always seen, criminals will use new tools and new technologies to engage in crime. You used a I think a law enforcement approach. I was noting earlier the NSA, FBI, and CISA putting out I think thoughtful guidance on some of their research into deep fakes and scams, and I think it’s really important for that information sharing to take place.
GORFINE: We’ve done it before, and I think we can continue to do it with this technology.
BRITT: I’m hopeful that we see more guidance, particularly out of the CFPB, for general consumers and alertness on that, in particular. My time is, kind of, winding down, so I want to make this as quick as possible, but I’m very interested in how we can utilize AI to reach underserved communities. So, if each of you can just very quickly tell me, kind of, your top thought on what we need to be thinking about to make sure that we reach those that may not be reached otherwise. Yes, please.
MS. MELISSA KOIDE: Happy to go first. I think the data is really critical, making sure the data that are being used are actually representative of underserved communities.
KOIDE: Happy to follow up.
BRITT: Absolutely, please. I would love to work with you on that.
GORFINE: I think in the retail banking space, the ability to use models to provide access to capital to underserved communities is tremendous. On the capital market side, I think digital investment advisers that are using these tools to bring down the cost of advisory services that used to cost tens of thousands of dollars and only the wealthiest could afford it, now retail investors are able to access sound investment advice, as well, because of these tools.
BRITT: Ok, thank you.
PROFESSOR MICHAEL WELLMAN: I second that last point. I think that AI has a tremendously, potentially democratizing dimension by making really powerful tools and broad knowledge available to many people if that access can be ensured to be equitable.
BRITT: Ok, thank you so much. Thank you, Mr. Chairman.
High quality video of Senator Britt’s line of questioning can be downloaded for media usage here.