  Identifying and then implementing an effective response to disruptive new AI
technologies is enormously challenging for any business looking to integrate AI
into their operations, as well as regulators looking to leverage AI-related
innovation as a mechanism for achieving regional economic growth. These
business and regulatory challenges are particularly significant given the broad
reach of AI, as well as the multiple uncertainties surrounding such
technologies and their future development and effects. This article identifies
two promising strategies for meeting the AI challenge, focusing on the example
of Fintech. First, dynamic regulation, in the form of regulatory sandboxes and
other regulatory approaches that aim to provide a space for responsible
AI-related innovation. An empirical study provides preliminary evidence to
suggest that jurisdictions that adopt a more proactive approach to Fintech
regulation can attract greater investment. The second strategy relates to
so-called innovation ecosystems. It is argued that such ecosystems are most
effective when they afford opportunities for creative partnerships between
well-established corporations and AI-focused startups and that this aspect of a
successful innovation ecosystem is often overlooked in the existing discussion.
The article suggests that these two strategies are interconnected, in that
greater investment is an important element in both fostering and signaling a
well-functioning innovation ecosystem and that a well-functioning ecosystem
will, in turn, attract more funding. The resulting synergies between these
strategies can, therefore, provide a jurisdiction with a competitive edge in
becoming a regional hub for AI-related activity.
