🎧Artificial intelligence is fundamentally reshaping the financial sector – yet its growing use also raises pressing questions around governance and supervision. Find out what this means in the latest episode of “Alles Legal – Fintech-Recht kompakt”. – Tune in now!
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AI in financial services: innovation meets regulation
In episode #125, Josefine Spengler, Attorney-at-Law, Certified Specialist Lawyer for IT Law and Partner at Annerton, speaks with host Dana Wondra (Payment & Banking) about the structural integration of AI into financial institutions – and why this inevitably turns into a supervisory and governance issue.
AI is no longer experimental. It is already embedded in credit decision-making, risk management, fraud detection and transaction monitoring – in other words, at the very core of regulated institutions. As a result, supervisory authorities are paying close attention.
From efficiency tool to core infrastructure
What began as a means to increase efficiency is becoming part of the structural backbone of financial institutions. Banks and payment service providers face rising costs, increasing regulatory pressure and growing competition from data-driven FinTechs and BigTechs.
In highly standardised and data-heavy environments, AI can unlock significant value. In addition to traditional models, generative AI is gaining importance – for instance in analysing complex compliance requirements or supporting customer service.
However, the closer AI moves towards key decision-making processes, the greater the need for transparency, accountability and effective oversight.
New risks require robust governance
Supervisory authorities are cautious – for good reason. AI models operate on probabilities, and their outcomes are not always easily explainable. This raises fundamental questions:
- How can decisions remain explainable?
- Who is accountable?
- How can models be effectively monitored over time?
There are also dependencies on third-party providers, the use of sensitive data and the dynamic nature of machine learning models. For regulated entities, implementing AI is therefore not a one-off project but an ongoing governance task.
Regulation in this context is not merely restrictive – it provides the framework that enables sustainable and trustworthy innovation.
Conclusion: striking the right balance
The key challenge lies in balancing innovation with regulatory control. Efficiency gains must not come at the expense of stability and trust – especially in a sector that is critical to the functioning of the wider economy.
About This Podcast
Alles Legal – Fintech Law in Brief delivers weekly insights into legal and compliance topics in the banking and fintech sectors.
This podcast is a collaboration between Payment & Banking and PayTechLaw.
Each Wednesday, our experts explain current legal developments in a clear and concise way – no legalese, just the context you need. Since 2021, PayTechLaw authors and Annerton lawyers have been bringing legal depth to the mic without losing clarity.
Whether it’s PSD3, DORA or FiDA – we provide the background you need. In 20 minutes. Straight to the point.
