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Federal Reserve Speeches·

Bowman, Responsible Innovation and Financial Inclusion

  • The Federal Reserve's third annual Financial Inclusion Conference emphasized that responsible bank innovation is essential for building a strong financial system & an economy that serves everyone.
  • Banks can use innovation to create faster payment systems, lower costs, expand product availability for underserved consumers, & promote market competition.
  • Regulators aim to create a supportive environment by setting clear expectations & providing clarity while avoiding micromanagement of individual business decisions.
  • Artificial Intelligence (AI) holds promise for expanding credit access to low- and moderate-income consumers by utilizing alternative data sets to assess creditworthiness.
  • The adoption of AI in credit decisions presents significant legal compliance challenges that require greater clarity on appropriate oversight levels.
  • Supervisory guidance must ensure smaller banks with fewer resources can still innovate & implement modern technology without being hindered by rigid requirements.
  • Financial institutions are encouraged to leverage existing risk-management frameworks with tailored enhancements to address specific AI-related risks.
  • The Financial Stability Board (FSB) published a consultation report on "Sound Practices for Responsible Adoption of Artificial Intelligence (AI)" that offers practical, adaptable guidance rather than one-size-fits-all rules.
  • The FSB report is open for public comment through July 22, 2026.
  • The Federal Reserve has engaged with banks on AI issues for nearly a decade to ensure supervision keeps pace with evolving technology while safeguarding safety & soundness.
  • Unnecessary complexity or prescriptive regulatory requirements risk limiting the innovation needed to expand access to affordable financial services.