U.S. Sen. Mike Rounds, R-South Dakota, speaks Aug. 12, 2024, at the David Lust Accelerator Building in Rapid City about federal housing funds awarded to the Black Hills area. (Seth Tupper/South Dakota Searchlight)
U.S. Sen. Mike Rounds, R-South Dakota, reintroduced legislation Wednesday that he said would create “a safe space for experimentation” with artificial intelligence in the financial services industry.
He made the remarks during his first hearing as chairman of the Senate Banking Committee’s Subcommittee on Securities, Insurance and Investments. He framed the day’s discussion around “guardrails and growth.”
“We need regulatory frameworks that both support innovation and protect consumers,” Rounds said.
The legislation is the Unleashing AI Innovation in Financial Services Act. Rounds said the bipartisan bill would “create a venue for financial institutions and regulators to work together to test AI projects for deployment.”
“By creating a safe space for experimentation, we can help firms innovate and regulators learn, without applying outdated rules that don’t fit today’s technology,” Rounds said.
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Witnesses at the hearing included leaders from Aon, NASDAQ, and IBM Research, who discussed how AI is transforming how firms analyze data, assess risk and detect fraud.
Rounds gave several examples of that. He said firms in the capital markets are using AI to analyze trading patterns and financial disclosures, to guide investment decisions, to execute trades more efficiently and to reduce costs.
In insurance, said Rounds, who has a history in the industry, AI is reshaping how companies assess risk and deliver coverage, particularly in underwriting businesses. Insurers are using machine learning to analyze claims histories, industry benchmarks and other data to better understand a company’s risk profile. The tools are helping insurers price policies more accurately, Rounds said, to speed up underwriting decisions and expand coverage to companies that previously may have been too complex or too risky to evaluate.
In the area of fraud prevention, Rounds cited Card Policy Council reports indicating one major credit card network’s AI-driven security enhancements have boosted its fraud detection rates by up to 300% and prevented over $50 billion in fraud in the past three years.
“This is exactly the kind of progress we should be encouraging,” Rounds said.
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U.S. Sen. Mike Rounds, R-South Dakota, delivers opening remarks at a Senate subcommittee hearing on July 30, 2025.
