The EU AI Act’s Impact on Artificial Intelligence Applications in Financial Services

Abstract

This paper examines the significant implications of the European Union’s
Artificial Intelligence Act (EU AI Act) for US and other non-EU financial
technology firms involved in developing or deploying AI systems within the
EU. The Act’s risk-based classification and stringent compliance obligations
present considerable regulatory and operational hurdles for AI applications in
crucial financial services like credit scoring and algorithmic trading. The analysis
details how requirements for conformity assessments, data governance, human
oversight, and auditability impact these applications. Furthermore, the paper
evaluates the contrasting regulatory philosophies of the EU and the US, offering
strategic recommendations for firms and policymakers navigating this
transatlantic AI governance landscape. Given the EU’s growing regulatory
influence, proactive compliance is essential for non-EU firms to avoid market
exclusion. The paper concludes with policy considerations aimed at balancing
regulatory rigor with advancing innovation.