5 AI-related steps to take before the SEC examiner knocks

Financial regulators are turning their focus toward how businesses use Artificial Intelligence. If you offer consumer financing or use AI-driven tools to assess creditworthiness, you need to prepare for increased scrutiny. The SEC is specifically looking at how firms oversee their AI models and protect customer data. For retailers and operators, this means you can no longer treat your financing software as a 'black box.' You must understand how your technology partners are using customer data and ensuring fair outcomes. Regulators are worried about two main things: lack of human oversight and weak cybersecurity from third-party vendors. If you rely on an AI platform to approve or deny customers for credit, you are responsible for that decision-making process. You should document who is responsible for monitoring these tools. You also need to verify that your vendors have strict protocols for handling sensitive financial information. Before an auditor or regulator asks questions, ensure your internal policies reflect your actual tech usage. Start by creating an inventory of every AI tool your team uses, from customer service bots to credit scoring models. Make sure your contracts with tech providers clearly define who owns the data and how it is protected. Being proactive now prevents costly compliance headaches later as new AI laws take shape.

Source: American Banker — Top News

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