of this goal, in march of this year, the agencies published a request for information on financial institutions ’ use of artificial intelligence. as part of this request for information, the agencies sought details about banks ’ challenges in developing, adopting, and using this technology, including those challenges related to third - party services. while we are still reviewing and processing the feedback, initial reactions from federal reserve staff indicate that these responses are very helpful in our consideration of next steps. so, i would like to thank those who provided comments in response to the agencies ’ request, especially those pertaining to the use of artificial intelligence by community banks. comment letters confirmed our understanding that at times community banks choose to engage with fintech partners and their models to tap into the benefits of ai. we have also heard loud and clear that acting on an interagency basis to ensure regulatory consistency is very important. as we consider the information collected and the potential next steps, i will encourage federal reserve staff to continue exploring opportunities to provide supervisory clarity on this topic and more 3 / 4 bis central bankers'speeches generally to consider ways to help community banks innovate in the application of new technologies. conclusion in conclusion, i welcome comments and feedback not only on the resources the federal reserve and other agencies have published recently but also regarding additional resources that may be helpful for community banks as they continue to pursue access to innovation. and in the coming weeks, i look forward to participating in two upcoming innovation - focused programs oriented toward community banks. the federal reserve will host an “ ask the fed ” program later this fall focused on community banks and service providers, and the board and the kansas city reserve bank will jointly host an innovation office hours event later this month. frequent and continued engagement with bankers, fintechs, and other third parties has demonstrated the nuance, complexity, and many considerations involved in promoting community bank access to innovation. it is my sincere intention that the community bank / fintech partnership paper, the vendor due diligence guide, and proposed third - party, risk - management guidance serve as a foundation upon which the federal reserve will continue to build. 1 conference of state bank supervisors, 2020 csbs national survey of community banks ( pdf ), 2020 research and policy conference. return to text 4 / 4 bis central bankers'speeches

their risk assessment when considering a new relationship with a fintech. i have often heard from community bankers that the manpower and other costs related to due diligence are formidable barriers for banks seeking to establish new third - party relationships. a recent survey of community banks confirms that burdens related to due diligence are indeed an impediment to new third - party relationships, including those with fintechs. 1 this guide was developed to help reduce these burdens by providing a practical resource for community banks when assessing the risks of potential fintech partnerships. this optional and customizable resource does not establish new regulatory expectations but it can serve as a starting point for banks in their due diligence process. a community bank can tailor how it uses the guide to meet its unique circumstances and the specific risk - management needs posed by each fintech relationship. a community bank can also share the guide with potential partners to help them understand the bank ’ s risk - management requirements. specifically, the guide contains relevant considerations, sources of information, and illustrative examples within six key areas of due diligence. these include, but, of course, are not limited to, business experience and qualifications, financial condition, and legal and regulatory compliance. i hope this guide will encourage responsible innovation that takes into account the range of potential risks of a partnership in addition to its potential benefits. request for comment on interagency third - party risk management guidance while the federal reserve will continue to focus on developing resources for the community bank sector, it is also important to ensure that guidance is up to date, it supports the evolving range of partnerships, and it is consistent across all banking agencies. in july, the federal reserve, the occ, and the fdic published for comment proposed guidance for banks managing the risks of third - party relationships, including those with fintechs. this guidance should reduce unnecessary burden by eliminating variation in supervisory views. it is also my hope that this guidance will better address the landscape of the third - party relationships that exist today. i am particularly interested in hearing from a wide range of community banks on whether the guidance is clear, helpful, and appropriately calibrated to address the risks associated with these arrangements. use of artificial intelligence the final topic for my remarks today is the use of artificial intelligence ( ai ). through clear, consistent supervisory guidance combined with useful tools and resources, supervisors can continue to support community banks in their efforts to navigate an increasingly complex world. in pursuit