UK Finance’s latest must–read blogs

Responsible AI in Recruitment guidance from the Department for Science, Innovation and Technology (DSIT)?

Financial institutions use automated tools in their processes already and a wider range of?AI-powered products?are emerging quickly. DSIT published responsible AI in recruitment guidelines on 25 March 2024. In this blog, I summarise key takeaways from the paper.?

Overview:?

• Adopting Artificial Intelligence (AI)?enabled tools in HR and recruitment simplifies the existing processes and enables greater efficiency, scalability, and consistency in hiring process.?
• However, these technologies also pose risks. The risks include amplifying current biases, digital exclusion, and discriminatory advertising and targeting.?
• Consequently, there is a need for risk assessment, performance testing, and bias audit (along with impact assessment) to minimize the risk of harms from deploying AI systems in recruitment.?

Assurance mechanisms for different phases of the use of AI in recruitment?

Before procurement?

• Organisations should consider a clear vision that outlines the desired purpose of the system. They should lay out what problem their organisation is trying to solve, and how using AI system can help to address this problem.?

?During procurement?

• Suppliers should be able to evidence?consideration of the accuracy and scientific validity of AI systems, along with appropriate risk identification and communication.?

?Before deployment?

• Prior to deployment, it is recommended that organisations pilot the technology with potential users (employers, job seekers).?

Live Operation?

• Once an organisation has deployed an AI system, it should set up regular monitoring and evaluation to ensure that the system continues to perform as expected over time.

Read the full blog post by Sushant Subedi, Digital and Tech Cyber Analyst, UK Finance.?

?

Limiting the Impacts of Future Financial Crime, Design Considerations for Future Money?

The ‘future of money’ is a hot topic and the range of projects, experiments and pilots worldwide are testament to the important changes we can expect to see for our money and payment systems in the next decade.??

This paradigm shift has in part been stimulated by the use of new technologies like distributed ledger technology (DLT). We see that technology having an impact in the private sector, in the development of cryptoassets and stablecoins. More recently, this technology has been explored in the context of regulated money, for example, tokenised bank deposits and in the wholesale markets, tokenised securities. The central banks are of course also actively exploring the implications of these new technologies, particularly through projects investigating retail and wholesale CBDC.?

These new forms of money and their inherent functionality are likely to unlock new use cases and enhancements for consumers and businesses. However, the technology could also introduce new risks. It is therefore incumbent on industry and policy-makers to consider the future crime risks that may be enabled and to think now about how to mitigate those risks from the outset in the design.?

In this blog post, Joshua Tjeransen, Researcher and PhD Student at King’s College London, gives his insights into the future crime considerations of Central Bank Digital Currencies (CBDCs).???

Reporting on Crypto-Assets – why you need to act now on CARF?

Led by the OECD, the new Crypto-Assets Reporting Framework (CARF) will bring digital assets into scope for tax reporting from 1 January 2026?

This article considers the implications of CARF for the current and emerging use cases for blockchain technology in banking and payments. ?

Overview?

Crypto-Assets reporting under CARF will begin from 1 January 2026 – 50+ jurisdictions are already committed to implementing these rules globally, including the UK and the EU27.?

CARF targets a wide range of tokens used for payment or investment purposes. That’s likely to include any tokens that could be traded on an exchange – whether that’s a traditional exchange, a crypto-native exchange like NFT marketplaces, or de-fi pooling and swaps, or on permissioned blockchains.?

The framework requires enhanced customer documentation and information collection, exceeding Anti-Money Laundering (AML) and Know Your Customer (KYC) norms, and necessitates detailed annual reporting of transactions at the token level.??

This initiative is part of a global movement to regulate digital assets akin to financial services, paralleling developments like the EU’s Markets in Crypto-Assets Regulation (MiCA) and the Financial Action Task Force’s Guidance for Virtual Asset Service Providers.?

Read the full blog post by David Wren, Partner KPMG LLP. ?

?

The evolution of equity release: a push for flexibility and innovation?

In the ever-evolving landscape of equity release, a significant transformation is underway, propelled by the demand for greater payment flexibility. This marks a pivotal moment in the industry's trajectory, as stakeholders strive to empower consumers and enhance their financial well-being.?

Why flexibility matters?

Recognising the diverse needs of consumers, there is a growing acknowledgment of the importance of offering flexible payment options. Traditionally, equity release products have been less flexible in this sense. However, by introducing options for partial or full interest payments, as well as ad hoc contributions, lenders can provide consumers with greater choice and control over their financial commitments.?

Empowering borrowers?

At the heart of this transformation is the empowerment of consumers. Many individuals approaching retirement age still maintain an active lifestyle and may benefit from the ability to make payments towards their equity release mortgage – whether that be mandatory payments for a period (in the form of a lifetime payment product) or voluntary payments (where payments cover all or part of the interest being charged).?

Driving innovation?

To meet the evolving needs of consumers, lenders (and their funders) must embrace innovation in product development. This entails exploring new avenues for payment flexibility and leveraging technological advancements to create seamless and user-friendly solutions.?

Embracing technology?

The role of technology in driving this transformation cannot be overstated. With the advent of advanced digital tools and platforms, lenders can streamline the process of managing equity release products and design and test new products without expensive change programs.?

Read the full blog post by John Tilzey, finova. ?