Letter emphasizes oversight based on AI use cases and highlights need for data privacy, transparency, and human oversight

Hartford, CT (March 16, 2026) – The American Fintech Council (AFC), the largest industry association representing both responsible fintech companies and innovative banks, submitted a comment letter to the Connecticut Department of Banking in response to the Department’s regulatory guidance regarding governance of artificial intelligence systems used by Connecticut-chartered financial institutions and other regulated entities. In its letter, AFC offers recommendations for a risk-based AI governance framework that supports responsible innovation while maintaining strong consumer protections and operational accountability.

“Artificial intelligence is increasingly supporting core financial services functions, from credit underwriting and transaction monitoring to fraud detection and customer service,” said Phil Goldfeder, CEO of the American Fintech Council. “Regulatory guidance should recognize that these technologies often enhance existing processes rather than replace them, and oversight should focus on ensuring institutions continue to operate responsibly and transparently.”

AFC’s letter encourages regulators to adopt a risk-based governance framework grounded in the specific use case of an AI application, noting that institutions already maintain robust model risk management and enterprise risk governance frameworks for activities such as underwriting, fraud monitoring, and compliance operations. The letter recommends that oversight build on these existing structures and align expectations with the operational context, data sensitivity, and potential consumer impact of each application. It also highlights the importance of governance expectations that prioritize data privacy, transparency into how AI systems operate, and meaningful human oversight to ensure responsible deployment.

“A risk-based approach to AI governance allows regulators and institutions to tailor oversight to the specific function and impact of each application,” said Ian P. Moloney, Chief Policy Officer at the American Fintech Council. “By aligning expectations with how these technologies are actually used, financial institutions can continue to innovate responsibly while maintaining strong protections for consumers.”

A standards-based organization, the American Fintech Council (AFC) is the largest and most diverse trade association representing financial technology (fintech) companies and innovative banks. On behalf of over 150 member companies and partners, AFC promotes a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies.

‍