Regulatory approaches to digital innovation and AI are in flux with authorities seeking to find the right balance between promoting innovation and ensuring potential risks are controlled.
In this year’s edition of KPMG International’s Evolving Asset Management Regulation report, KPMG professionals examine the current state of regulatory play on digital and AI with a focus on helping asset managers create effective compliance frameworks.
As digital innovation spreads across the asset management industry, many regulators are reassessing their approaches to ensure risks are being appropriately managed. Regulation related to AI is in flux. The landscape for fund tokenization is being refined. And digital assets are also experiencing something of a regulatory overhaul.
Across these topics, the one commonality is regulatory divergence, which will be particularly challenging for global asset managers seeking to develop and deploy AI tools and technology centrally at an enterprise level.
“While the specifics may be diverging, there is a clear direction for regulatory travel around digital innovation,” says Jim Suglia, KPMG International’s Global Head of Asset Management. “We are seeing greater regulatory support for new and innovative products, better facilitation of technological developments in a regulated environment and more targeted policymaking alongside more proportionate supervision.”
As such, it will be important to ensure that effective compliance frameworks are developed as AI and technology use cases are scaled up in the business, from portfolio management and advice, all the way through to customer experience and support.