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What the Trump presidency will mean for banks’ AI projects
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What the Trump presidency will mean for banks’ AI projects

When the Trump administration takes control in January, many observers expect that the Biden administration’s executive order on AI, which imposed certain standards and protections around the development and use of the technology, be dismantled. What that order will be replaced by is uncertain and, to some extent, subject to the whims of influential advisors like Elon Musk and Peter Thiel.

The Trump-led government is bound to be pro-business and anti-regulation, as was the case last time.

“My guess is that policy will focus on American businesses and workers to maintain global competitiveness in AI development,” said Ryan Hildebrand, chief innovation officer at Bankwell, a Connecticut community bank based in New Canaan with just over $3 billion in assets. “It will aim to protect American jobs and intellectual property, possibly through restrictions on foreign AI companies and favoritism toward U.S.-based developers.”

But that doesn’t mean banks can relax. Bank regulators will likely continue to require that they comply with applicable laws, including anti-discrimination rules and fair lending rules, in their use of AI.

What a Trump AI policy could include

Everyone interviewed for this article agreed that Biden AI Order it’s not long for this world.

“Trump said he would repeal Biden’s executive order on AI,” said Alenka Grealish, senior analyst at Celent.

The Trump administration will try to stamp its own policy on AI, said Aaron Cummings, a partner at Crowell & Moring.

“I would characterize President Biden’s approach as very cautious and very heavy on assignments to different U.S. agencies to develop a lot of regulations, because of the great concerns about how this could disrupt society and some of the dangers that flow,” Cummings says. “The Trump administration is very aware of all of this, but it also believes that we have the opportunity to create an artificial intelligence industry in which the United States can become a world leader. So the Trump administration wants to “We can’t crush this nascent industry with a heavy regulatory hand.”

THE The Washington Post reported that a Trump-affiliated group, the America First Policy Institute, is drafting an AI policy paper for the new administration that highlights the need for the United States to take the lead in AI development , especially in military technology. AFPI did not respond to a request for comment or interview.

“There are a lot of very good people at AFPI and they are definitely working on this issue,” Cummings said. “They have already published extensively on this issue, and so I would not be at all surprised if they play a leading role in preparing various policy documents that the Trump administration will use.”

Unlike Biden’s executive order, which emphasizes global collaboration and equity, “an ‘America First’ policy would likely be more protectionist, focusing on national security and U.S. economic dominance in the sector of AI,” Hildebrand said.

But close Republican advisers like Musk, Thiel and JD Vance are also influential.

“I think there’s no doubt that Elon Musk will have as big a role as he wants to play in Trump’s thinking about how to approach AI policy,” Cummings said. “He clearly has Trump’s ear, and he’s also an expert in the field. I think he’s going to be one of the most influential voices on AI policy.”

Gilles Ubaghs, strategic advisor at Datos Insights, pointed out that there is a paradox in the way Trump and his advisers approach regulation.

“While Republicans have historically been and continue to support deregulation, the populist wave in recent years has generally been quite negative toward big tech, with much discussion of the perceived injustice of social media,” he said. he declared. “Add to that the arguably more recent trend of JD Vance’s economic populism, and there’s a push and pull here to bring big tech to heel while also wanting to deregulate. Trump tends to go with whoever got his ear last, and so now you” There are people like Peter Theil with his support for Vance, and now Elon Musk is doing what he’s doing, so their influence is likely to be really decisive at least for now , and this is generally not the case for big tech. like regulations of all kinds. »

On the other hand, Musk is also part of the effective altruist movement, which is concerned about the long-term dangers of AI and the threat it poses to humanity.

“In theory, effective altruists are at least publicly cautious about AI,” Ubaghs said. “Again, X.AI is a very real investment, so again, these are conflicting views.”

Elon Musk’s involvement makes it “difficult to predict how the Trump administration will regulate AI, if at all,” Grealish said. “The challenge in prediction is that Elon Musk has become a powerful influencer and his views might differ from those of Republicans.”

Given all of this, it’s very likely that the Biden AI order will be rescinded, but something very similar will take its place, Ubaghs said.

“Some of the current guidelines for developing industry standards will likely be abandoned, but some sort of similar voluntary code will likely emerge in the near future,” he said. “What is completely out of the question for the foreseeable future is any sort of regulatory mandate that has any real impact. Voluntary codes of practice are good and a good starting point – but in reality, without stricter regulatory regimes in place, there is really nothing stopping technologists from doing what they do. they want.”

The focus will likely be on industry self-regulation, Ubaghs said.

No free passes for banks

The coming change in AI administration and policy does not mean banks should be less careful in deploying AI, Hildebrand said.

“On the contrary, there is a need to invest more in data security, ensure AI models are well understood, comply with evolving regulations and mitigate reputational risks,” he said. he declared. “The worst outcome would be a significant incident related to the use of AI, which could erode customer confidence in the banking sector. Such an event would seriously hamper innovation, regardless of policies and policies.”

Given the rapidly evolving AI landscape, banks must prioritize the security and privacy of customer data, ensure that AI is unbiased, clearly communicate how it works, closely monitor policy changes and training staff to use AI responsibly, Hildebrand said.

“Regardless of regulatory measures, banks should continue to focus on upholding first principles, such as ethical use, accountability and transparency,” Grealish said.

Banks still have to deal with existing regulations and rules, none of which have changed, Ubaghs said. They should also be wary of the liability and reputational risk of using imprecise AI tools.

“The potential for fraudulent and rogue AI solutions is likely to increase with a less regulated environment,” he said. “Most banks remain extremely cautious about their AI projects and are expected to pursue them.”

If anything, their job now becomes more difficult, as banks will have to do more diligence on these solutions, he said.

“Ironically, increased regulation and standardization would likely help the market immensely by creating a baseline for the technology and alleviating many of the reasonable fears and concerns that the market currently has in almost every sector,” Ubaghs said.

Cummings advises industry leaders to speak up and be part of the conversation.

“Policymakers are very keen to hear from companies who are trying to deploy this technology effectively and who are grappling with all the issues being discussed,” he said. “And I think there’s a real opportunity for companies already using this to help policymakers understand the risks and opportunities available and help safeguard some of the innovation that’s happening now.”