AI the biggest challenge and opportunity for regulation

Oksana Patron

8 June 2023

Artificial intelligence (AI) has been voted by regulators as the biggest challenge but also an opportunity in the next couple of years and is a result of the growing role digitalisation plays in the  modern economy.

This followed an earlier announcement from Federal Treasurer, Jim Chalmers, who was speaking on Wednesday at the Australian Banking Association (ABA’s) annual conference and revealed the Government’s plan to overhaul Australia’s payments systems, which will include ending cheque payments and Australia’s Bulk Electronic Clearing System (BECS) by 2030.

The Australian Securities and Investments Commission (ASIC’s) chair, Joe Longo, speaking on the panel dedicated to the role of regulation in uncertain economic times, said: “The treasurer talked about the payment system today but in terms of uncertain economic times it is not just the uncertainty of what is happening economically but it is also the uncertainty of the risk and the promise that these technologies bring.

Asked about the key priorities from the regulatory perspective, he said that “it was hard not to start with digitalization and growing expectations of technology and digitalization for our economy” and added that ASIC was currently considering what the implications of AI would mean for products and services.

“We are talking about both sides of the same coin. The big challenge in this, and something that ASIC is working on right now very intensely, is how these new technologies, we call them AI for now, [..] will manifest themselves in new form of conduct and new form of harm for investors and consumers,” he said.

Michelle Bullock, the Deputy Governor at the Reserve Bank of Australia (RBA), who was also a panelist, agreed that the broader implications of AI would be of a significance for the central bank.

“The big challenge for me at the moment is thinking about the AI and potential implications of that for work we are doing at the bank, it’s not only about the payment system, I think it is more generally about the whole cyber risks thing. It’s a big challenge,” she said.

“The opportunity is actually AI too: the reason being for that  it can help us to do our jobs better but we do need the framework to get on top of it. So, AI is a challenge and an opportunity.”

John Lonsdale, chair of the Australian Prudential Regulation Authority (APRA), highlighted the importance of the safety of the system and keeping the system safe in the face of disruptive technologies that were changing in nature.

“I think Michelle is exactly right. Technology is the one thing I would say we’ve got to be aware how that links to the safety and I think that is an opportunity as well,” he added.