German Financial Regulator BaFin to Monitor Banks’ AI Use

Obermöller said BaFin does not plan to examine every AI system at every bank. The AI Act mandates monitoring rather than supervision, he noted. “We monitor whether companies are complying with the transparency requirements and provisions regarding prohibited AI practices,” he said. “And we’ll be looking at whether companies are taking measures to promote AI literacy among their employees.”

The monitoring starts immediately. BaFin will address so-called high-risk AI beginning in December 2027. Systems that fall under that designation include those used by insurance companies for risk assessment and to price life and health insurance policies. “AI can, for example, calculate the individual surcharges a customer must pay,” Obermöller said. “In the case of banks and other financial institutions, ‘high-risk AI’ generally refers to AI systems used to evaluate the creditworthiness and credit scores of natural persons.”

In a separate interview earlier this month, Maik Taro Wehmeyer, co-founder and chief executive of Taktile, predicted that 2026 will be the year AI comes to financial services. He said the bigger competitive advantage now comes from AI’s ability to dramatically shrink decision times. “If I’m a small business owner and I’m asking for a loan, and I get the answer not within 14 days … but within five minutes, how great is that?” he said.

The AI Act, which took effect in August, gives national regulators like BaFin the authority to monitor AI systems used in high-risk applications. Financial institutions that fall short on transparency or use prohibited AI practices could face enforcement actions, though the regulator’s initial focus is on compliance checks.