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OTTAWA — As Canadian banks continue to adopt AI-powered processes on their back-end systems, industry experts are warning that regulatory and consumer protection safeguards are struggling to keep pace.

While many Canadian banks are rolling out simple AI-driven conversational chatbots built into their online platforms, banking executive John Landry told the Toronto Sun that internal machine-learning tools are already ubiquitous behind the scenes.

“It would be the exception for a bank of any kind of regional size in Canada to not have any form of AI, at least in its operations and its colleague-facing activities,” he said.

Canadian banks lagging behind

But while Canadian banks largely limit their AI chatbots to basic inquiries, transaction histories or directing inquiries to the correct customer service agents, banks south of the border are using the technology for more.

“In the U.S. they’re further along,” he said.

“With Bank of America, for example, an AI agent can initiate payments on Zelle and otherwise — that’s an obvious place to look to see how things are going to evolve in Canada.”

That potential expansion, Landry warns, introduces some obvious risks for consumers — including identity theft, data theft and various security vulnerabilities.

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Who’s in control?

Landry cautioned that current regulatory frameworks were designed long before the modern spread of AI.

“The current safeguards predate really contemplating AI,” Landry said, pointing to patchworks upon patchworks of oversight spread across numerous federal bodies, like the Office of the Superintendent of Financial Institutions (OSFI),FINTRAC , the Financial Consumer Agency of Canada (FCAC) and the Bank of Canada.

Landry said there are a number of questions Canadians should be asking their banks, including what AI agents are permitted to do on their own and what requires explicit consent; demanding transparency about how banks use AI; what financial limits are in place for AI-facilitated transactions; and who’s on the hook if an AI-powered goof-up costs customers money.

“When we’re talking about the banking industry, it’s really around bridging that gap between: Do I still hold the keys? Do I still have control, and what do I have control over?” he said.

“Giving up a little bit of control can give you a lot of convenience and maybe even more accurate information and better decisions — but it could also undermine you.

“That’s really important — do you still have control?”

bpassifiume@postmedia.com
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