Responsible AI Is a Risk Imperative for Banking

Rhys Kiff, Group Chief Risk Officer, Bank of Ireland

23 July 2026 – We often hear about ‘risk versus reward’, as if the two compete at opposite ends of a spectrum. However, the truth is that risk, and risk management, are central to the sustainable growth and profitability of a business. Reward doesn’t come without good risk management.

The debate on artificial intelligence (AI) also features much commentary on reward versus risk. AI is already transforming banking, supporting activities such as credit risk assessment, fraud detection, customer service, forecasting, compliance monitoring, and operational processes.

The rapid development of AI is introducing new risks. Cyber criminals are increasingly leveraging advanced AI capabilities, making it essential for organisations to continuously strengthen their security frameworks, adapt their defences and build greater resilience. As frontier AI models become more sophisticated, safeguarding customers, maintaining confidence in financial services and supporting the stability of the wider financial system have never been more important.

The principles of Responsible AI, transparency, fairness, accountability, privacy, safety, and reliability, closely align with the foundations of prudent banking. Financial institutions must be able to explain how AI driven decisions are made, particularly when those decisions affect customers. Trust cannot exist without understanding.

AI models often rely on historical data, which may contain biases or inequalities. Without effective controls, these biases can be replicated or amplified, potentially disadvantaging certain customer groups. Banks are custodians of highly sensitive personal and financial information, and customers expect this data to be handled securely and ethically. Responsible AI enables organisations to unlock the value of data while maintaining strong governance, privacy protections, and security controls.

At Bank of Ireland, we are embracing AI to help our people work more effectively, reducing manual processes, streamlining routine activity and creating more time for work that depends on human insight and expertise. The results so far have been highly encouraging, with significant benefits in areas such as fraud prevention and customer support.

As AI adoption accelerates, the consequences of weak governance increase. Poorly managed AI could drive inappropriate lending decisions, inaccurate customer communications, fraud detection failures, regulatory reporting errors, or incorrect risk assessments. Any of these outcomes could create significant financial, operational, regulatory, and reputational consequences. While financial losses can often be quantified and addressed, rebuilding trust is far more difficult. The greatest risk is a loss of confidence among customers, regulators, investors, and the wider public.

The EU AI Act and Ireland’s Regulation of Artificial Intelligence Bill, alongside Digital Operational Resilience Act (DORA), and future EU Anti-Money Laundering Authority guidelines on AI systems, is raising expectations around governance, transparency, accountability, and resilience. Financial institutions will increasingly need to demonstrate that AI is being deployed responsibly and effectively.

Our responsibility is to apply AI in ways that deliver positive outcomes; while combining its capabilities with the experience and judgement we have built over generations. We can use AI to better serve customers, empower colleagues and create a more secure and seamless banking experience – that’s the reward.

But we also need to properly manage the risk.

The measured balance of risk management practices versus reward support Bank of Ireland’s strategic objectives by strengthening relationships, simplifying business, and building a resilient company.