Weekly Wrap: Federal Reserve vice chair disses digital currency

This week, Bank Automation News discusses comments made by U.S. Federal Reserve Vice Chair for Supervision Randal Quarles’ to the Utah Bankers Association Convention this week, in which he compared central bank digital currency (CBDC) to the ill-conceived parachute pants of the 1980s. The BAN team also delve into recent public responses to a federal request for information on artificial intelligence and machine learning in the financial sector. While banks told federal agencies that they are already regulated enough, the Internet Association, which represents Google, Microsoft, Amazon and other internet titans, suggested the federal government issue guidance on AI explainability . Find a discussion of these topics and more in today’s episode of the Weekly Wrap with BAN Editor Myra Thomas and Associate Editors Jaspreet Kalra and Loraine Lawson for the week ended July 2, 2021. Subscribe to The Buzz Podcast on iTunes , Spotify , or download the episode .

The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Myra Thomas Hi, everyone. I'm Myra Thomas and welcome to the Buzz from Bank Automation News, where we explore how automation technology is transforming the banking industry. This is our weekly wrap for what's happening in the industry this week. And before beginning, I'd like to give a big thanks to band sponsors and advertisers, MX, Total Expert, and Zeta Tech. Thanks so much for your support. I'm pleased to be joined by associate editors Jaspreet Kalra and Loraine Lawson. It's July 2, 2021. And here are some big items that happened in the news this week. The Bureau of Labor Statistics reported that 850,000 jobs were added in June, with a slight uptick in the employment figures from 5.9%. Much better than expected, economists have predicted gains of only 700,000 jobs. the Wharton School found that Biden's infrastructure plan would cut the US debt and slightly increase GDP. Researchers at Wharton also found that the additional 579 billion and new infrastructure spending would probably increase domestic output by 0.1% and decrease the US debt by 0.9%. By 2050. And tech news, some interesting developments as banks continue to suck up FinTech firms, JP Morgan Chase agreed to buy open invest, a San Francisco-based ESG investing platform startup backed by Andreessen Horowitz, and founded by former Bridgewater associate employees. Wells Fargo also took a stake in the data lake, a provider of compliance and security for modern chat, video voice collaboration tools, adding to their growing list of FinTech firms in their portfolio. And now we're going to talk to our team of reporters and learn about some of the biggest news items from our editorial team. This week, I actually did a report on the fed the feds vice chair for supervision, Randall Quarles, who recently spoke on Monday actually, before the Utah Bankers Association at their annual convention. And his comments were quite interesting, given the fact that he referred to Central Bank digital currency as a novelty much like parachute pants in the 1980s. Some of his moments, some of the moments in the speech are obviously much more serious with his basic thoughts were that there was no need for central bank digital currency. There, you know, the dollar is pretty much already digitized in the way that we transact most of our banking business. And at the end of the day, you know, it would serve to undermine the US banking system, which I'm sure the private bank system here in the US is happy to hear. But that's sort of sort of it for that piece. But I think Jaspreet as a piece that where he's been catching up on the Federal Reserve and the OCC and the FDIC, etc, a number of regulatory ARBs reached out for an input on Jaspreet. Maybe you could fill us in more. Jaspreet Kalra Sure. So this is a public request for public input put out back in April, where federal regulators, five of them, the Federal Reserve, the OCC, FDIC, the CFPB, and the regulator for credit unions, all of them said that we want to understand better how financial institutions have been using AI within their operations. And they had some specific risk associated questions. And they also had some risk associated questions on how AI us can impact fair lending laws and requirements at these financial institutions. So these responses have sort of been trickling in, and July 1 was the deadline for all responses to be received. And I sort of focused on two or three responses in my piece yesterday, which was MasterCard and bank Policy Institute. Both of them had this very specific recommendation to regulators that sure AI is a new technology that banks and financial institutions have been using extensively. But we do not need fresher regulations, just to regulate the use of this specific technology. Their antitrust was the things like the Federal Reserve board's model risk management requirements, and existing fair lending laws already regulate whatever technology that may be used to sort of decision these, you know, underwriting methods decision, some sort of the risk models that are used therein, and putting on additional compliance requirements or putting on additional enforcement requirements would just slow down some of the innovation that's happening in the space. So that was interesting to see how the private sector is thinking on this sort of different from what the overall expectation may have been that they might demand pressure regulation, that's not the case. Myra Thomas Sure, sure. Do you get the sense that, you know, this is going to slow banks, other fintechs and financial institutions from thinking about investment in AI? I don't I don't get that sense to be true. Jaspreet Kalra But really, I mean, I don't think it's going to slow down investment given how there's like a lot of efficiency gain efficiency gains to be made within the space, but at the same time, it's nascent technology, there's like still kinks to be worked out, there's still some things it's applicable to, like, for example bank Policy Institute when addressing the requirements around explainability. Set very clearly that explainability for something that is a credit underwriting mechanism will be very different for explainability requirements for something that is just used to process documents internally. So the latter does not need to be as explainable to the end customer as compared to the former because it's much more customer facing. So I think what they're urging regulators to do is really take a case by case approach rather than have a blanket, you know, prescriptive approach.Myra Thomas So any other thoughts? Right, and I think you were digging a little bit deeper into some of the responses. Loraine Lawson Yeah, I think just Preet just touched on it. But the internet Association filed their response. And that is a group that includes Google, Microsoft, Amazon, some of the companies that we've seen entering the financial services sector recently. And their response was that they do need to focus on explainability, that there probably is a need for some guidance there. They suggested that they use existing regulations as much as possible, but noted that there is a difference as to sprit pointed out between doing credit underwriting with AI. And doing fraud prevention, one of these requires explained ability to the customer and the other doesn't really require that much explained ability. So they want a use case scenario where the regulations are based on use case rather than just across the board on AI. Myra Thomas Well, that sounds interesting. We're going to keep our readers posted as far as additional comments that keep coming in and look forward to a story on Tuesday that will continue to update developments and comments from FinTech as well as banking institutions. So let's, let's talk a little bit about I guess what we're working on for the coming week, I'm actually working on a story that's going to look at additional sort of efforts by a number of different banks to kickstart quantum computing projects that relate to financial and financial applications. And so I know credit Agricole, recently set up a team to investigate it. And there have been a number of their banking, bank banks that have also done the same. So that'll be interesting to dig, and see what's happening and sort of, you know, in the future, so Lorraine, what are you working on for next week. Loraine Lawson working on a story about intelligent document processing and some of the market trends we'll see for that, as well as a story on API security. That's that's becoming an issue API's are commonly used across fintechs and banks to connect to things and hackers are aware of that, and targeting those for exploitation. Myra Thomas And just free What are you working on for the coming week? Jaspreet Kalra So I'll be following up on the AI recommendations that are coming in from private partners, as you mentioned. Plus also I'm sort of exploring other story ideas around how satisfying chatbots have been for customers. This will be for the banks implementing them. Myra Thomas It sounds like you're sick. Thank you, everyone for joining us this week for the weekly wrap on the buzz. Here's a look ahead we did that. And also for more podcast content, check out Bank Automation News.com and search the Buzz from big for Bank Automation News on iTunes and Spotify. Thanks, everyone.

Weekly Wrap: Federal Reserve vice chair disses digital currency

Banks, internet titans sound off on whether feds need AI regs

Mastercard, Bank Policy Institute weigh in on regulating AI use in financial services

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Weekly Wrap: Federal Reserve vice chair disses digital currency

Banks, internet titans sound off on whether feds need AI regs

Mastercard, Bank Policy Institute weigh in on regulating AI use in financial services

Ant Group-backed Kakao Pay seeks up to $1.4 billion in IPO

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