FSB sets 12 practices for financial institutions using AI

The Financial Stability Board has issued 12 practices for financial institutions adopting artificial intelligence, covering organization-wide governance and risk management across the AI lifecycle. The guidance aims to improve coordination, cooperation and information-sharing across the international financial sector as banks and other institutions expand their use of AI.

Published Oct. 16, 2026, the practices are intended for financial institutions worldwide. The FSB said institutions can adapt them to their business models and risk profiles and add them to existing frameworks for cyber risk, technology and third-party suppliers.

The first group of practices covers governance. It calls for boards and senior management to oversee how AI adoption fits with an institution’s business model, risk appetite and strategy. Institutions should define responsibilities, include AI risks in broader risk-management systems, document their use of AI, and support continuing learning and adjustments.

The second group addresses risks linked to the development and use of AI systems. Institutions should assess the importance and risks of each AI use case when it is introduced and throughout its operation. The practices cover the selection of AI technology, data governance, the explanation of AI decisions, performance reviews and human oversight.

The guidance also addresses cyber and information and communications technology risks linked to AI, along with risks from dependence on external AI providers. The FSB recommends additional controls when AI systems cannot fully explain their decisions.

“The 12 sound practices emphasise the importance of organisation-wide AI governance and highlight considerations for managing risks throughout the AI lifecycle,” the FSB said.

The FSB will monitor changes in AI technology and its use and update the practices when necessary. The body brings together national financial stability authorities, international financial institutions, regulators, supervisors and committees of central bank experts. Bank of England Governor Andrew Bailey chairs the FSB.

Financial institutions are using AI to reduce manual work and apply it to more business activities. HSBC investment banking chief Michael Roberts has said AI agents could replace some human traders in financial markets within a few years, supported by advances in AI, quantum computing and distributed ledger technology.

HSBC has announced cuts to its human wealth-management workforce as it plans to use AI in those services. At ING, Chief Analytics Officer Bahadir Yilmaz said AI can support preparation for investment banking deals by reviewing documents and helping teams prepare for early client meetings.