This report examines the risk and mitigation strategies used by Australian financial services (AFS) and credit licensees around AI implementation. The report identifies a growing 'governance gap' in which AI adoption is outpacing risk management and governance frameworks. It calls on licensees to proactively update their governance arrangements to minimise the risk of consumer harm and ensure safe and ethical AI use. 

The review looks at 624 AI use cases across 23 AFS and credit licensees in banking, credit, insurance, and financial advice. The review encompassed a range of AI applications, including generative AI and advanced data analytics, with direct or indirect impacts on consumers.

The authors of the report note their support for the Australian Government’s Voluntary AI Safety Standard and intention to introduce mandatory guardrails ensuring testing, transparency and accountability for AI in high-risk settings but call on licensees and those who govern them to take a proactive approach to safeguarding AI use. 

Key findings

• 57% of use cases were less than two years old or in development. 
• 61% of licensees in the review planned to increase AI use in the next 12 months.
• 92% of generative AI use cases reported were less than a year old or still to be deployed.
• Only 12 licensees had policies in place for AI that referenced fairness or related concepts such as inclusivity and accessibility. 
• Only 10 licensees had policies that referenced disclosure of AI use to affected consumers.