Description
Book SynopsisThis book provides a comprehensive analysis of the primary challenges, opportunities and regulatory developments associated with the use of artificial intelligence (AI) in the financial sector. It will show that, while AI has the potential to promote a more inclusive and competitive financial system, the increasing use of AI may bring certain risks and regulatory challenges that need to be addressed by regulators and policymakers.
After analysing the technological foundations of AI, the book focuses on the use and regulatory challenges of AI in the banking, capital markets and insurance industries. It also analyses, compares and assesses the different strategies and international approaches that have been adopted to address the challenges raised by the use of AI. The book concludes by providing a holistic and cross-sectoral analysis of the use of AI in the financial sector.
The comprehensive, interdisciplinary, and industry-relevant approach adopted in Artificial Intelligence in Finance will provide students, practitioners and academics interested in financial markets with a broad understanding of the challenges and opportunities of AI in the financial sector. Additionally, the comparative and policy-oriented approach also adopted in the book will provide regulators and policymakers with innovative ideas and regulatory solutions that will help them address some of the most critical challenges associated with a new data-driven financial system.
Table of ContentsContents: Introduction xvii PART I FOUNDATIONS OF AI AND AI GOVERNANCE 1 Foundations of artificial intelligence and machine learning 2 Alfonso Delgado De Molina Rius 2 Explaining explainable AI 19 Richard Zuroff and Nicolas Chapados 3 Harmony in chaos 60 Yeong Zee Kin and Larissa Lim 4 Responsible AI 87 Marcus Bartley Johns, Joy Fuyuno and Dennae Smith PART II OPPORTUNITIES AND REGULATORY CHALLENGES OF AI IN THE BANKING INDUSTRY 5 AI governance frameworks for the banking sector 114 Virginia Torrie and Dominique Payette 6 Machine learning, alternative data, and the regulation of consumer credit markets 142 Nikita Aggarwal 7 AI-based consumer credit underwriting 151 Maayan Perel and Ruth Plato-Shinar PART III OPPORTUNITIES AND REGULATORY CHALLENGES OF AI IN CAPITAL MARKETS 8 The promises and perils of robo-advisers 178 Aurelio Gurrea-Martinez and Wai Yee Wan 9 Regulating AI trading from an AI lifecycle perspective 198 Alessio Azzutti, Wolf-Georg Ringe and H. Siegfried Stiehl PART IV OPPORTUNITIES AND REGULATORY CHALLENGES OF AI IN THE INSURANCE INDUSTRY 10 Opportunities and use cases of AI in the insurance industry 244 Magdalene Loh and Terence Soo 11 Regulation of the use of artificial intelligence for investment in the insurance industry 271 Christopher Chao-hung Chen PART V CROSS-SECTORAL ISSUES ON THE USE OF AI IN THE FINANCIAL SECTOR 12 Regulating artificial intelligence in finance and other regulated industries 294 Douglas W. Arner, Ross P. Buckley, Dirk A. Zetzsche, Brian W. Tang and Lucien J. van Romburg 13 Bias and discrimination in the use of AI in the financial sector 320 Minesh Tanna and William Dunning 14 Interconnectedness and financial stability in the era of artificial intelligence 350 Nydia Remolina Index 368
