LONDON — The United Kingdom’s innovation-friendly approach to regulating AI could give the country a boost compared to its counterparts in the European Union, Paul Dongha, group head of data and AI ethics at Lloyds Banking Group, told Bank Automation News.

In March, the U.K. government issued principles for regulators in finance and other industries to develop into sector-specific AI regulation measures creating a “pro-innovation approach,” Dongha said Thursday during the Fifth Annual Artificial Intelligence in Financial Services Conference.

Those regulators “are responsible for setting the principles for ethical AI in their sector, but it’s not enforceable by law yet,” Dongha said. “It’s basically saying to businesses, ‘Go ahead, race ahead. We’re going to support you. We’re going to help you, but we’re going to make your regulator responsible for regulating your industry.’” 

EU AI Act

For the broader market, the EU AI Act proposed in June presents a baseline for the use of AI across all industries. Dongha said the legislation could create hurdles for the evolution and innovation of the technology. 

The EU proposal sets some hard lines regarding AI use, including prohibiting facial recognition technology, social scoring based on behavior, and exploiting vulnerabilities, according to the proposal before the European Parliament.  

The EU AI proposal divides AI into four categories across all industries: prohibited, high-risk, medium-risk and low-risk, Dongha said. 

“It may be that there are some cases of those kinds of prohibited AI use or high-risk AI use that are really good in one industry, and it might be high risk in another,” Dongha said. “I think one of the disadvantages there is that it’s a blanket approach, and it’s a very forceful way of getting things done.” 

The proposal will make it difficult for companies in the EU to innovate using AI; they could be fined $10.7 million to $32.1 million or 2% to 6% of a company’s global revenue, he said.  

While the EU’s proposal could create hurdles for companies using and innovating with AI, the U.K.’s pro-innovation approach may come with its own drawbacks, Dongha said. 

Pro-innovation regulations could lead to similar pitfalls that occurred with the 1996 American Communications Decency Act, Dongha said. That legislation stated that social media platforms are not liable for content posted and shared on their platforms. However, technology later transformed social media companies, which now have greater influence over the dissemination of information, he added. 

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