The financial services industry is going through a fundamental change. Technology is enabling firms to change the ways they operate and how they interact with customers, suppliers, partners and employees. The advancements in the use of artificial intelligence (AI) and machine learning (ML) is increasingly predominant throughout the financial services industry. AI is growing in its level of sophistication, complexity and autonomy, leading to great opportunities for business and society Along with the maturity of AI, new challenges arise such as explainability, accountability, and ethical standards. A key challenge is that many of the AI applications operate within ‘black boxes’, offering little insight into how they reach their outcomes. As a result, regulatory interest in AI is growing as is the need for AI to explain itself. In this article we examine general principles of the use of AI, stress the criticality of explainability and highlight the trade-off between prediction power and explainability.

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