Staff Working Paper No. 947
By Imane Bakkar, Chiranjit Chakraborty, Carsten Jung, Marta Kwiatkowska and Carl Taylor
The use of machine learning and artificial intelligence (AI) in finance poses growing risks for software validation to financial institutions, markets, and decision makers, making it a key priority for regulators. This paper discusses accepted software validation practices; highlights challenges to those practices introduced by AI; and suggests areas of focus for developers when creating AI-based solutions for the finance industry. We discuss how practices may need to evolve to respond to these new challenges. Our objective is to inform policymakers and governance bodies, and to raise awareness among decision makers in financial institutions. We do not make policy recommendations at this stage.
Software validation and artificial intelligence in finance – a primer
