On May 1, 2026, Federal Reserve Vice Chairman Michelle W. Bowman, at a Financial Stability Oversight Council (FSOC) roundtable, discussed the increasing use of artificial intelligence (AI) in the banking industry and the need for balanced regulatory oversight. Bowman highlighted that AI is increasingly used in financial institutions for cybersecurity, operations, and customer services, providing major efficiency and security advantages.
In her speech, Bowman emphasized the importance of governance, risk management, and supervisory flexibility. She noted that regulators expect banks to understand how AI tools are being used, particularly when they affect material operations or consumer decisions such as lending. She also highlighted ongoing efforts by the Federal Reserve, OCC, and FDIC to refine model risk management and third-party risk guidance to better accommodate emerging AI technologies without hindering innovation.
Bowman also addressed cybersecurity concerns that come with the rapidly evolving AI capabilities, including tools designed to identify cyber vulnerabilities. While these technologies may strengthen defenses, they could also be misused by bad actors. As a result, regulators are increasing coordination with financial institutions and international organizations to develop consistent supervisory expectations and promote responsible AI adoption across the financial system.
Read Bowman’s full speech here.