The Five Beacons Model: A Prudential Architecture for AI Explainability and Legal Liability in Banking

The accelerated integration of Artificial Intelligence (AI) into core banking functions has generated a structural tension between algorithmic opacity and established prudential and liability frameworks. This paper introduces the Five Beacons Model (5B), a vertical, liability-oriented governance architecture designed to ensure decision-centric traceability across five institutional nodes: machine interface, engineering layer, human supervision, corporate governance, and client communication. By reframing explainability as an evidentiary infrastructure, the 5B model aims to mitigate legal exposure and strengthen systemic resilience within the Supervisory Review and Evaluation Process (SREP) and the Internal Capital Adequacy Assessment Process (ICAAP). A conceptual and prudential addendum to the Five Beacons Model as developed in the monograph: Garcia-Maceiras, JM (2026). 'The Banking Risk of AI Explanation: The Five Beacons Model'. ADR Notebooks No. 1. Zyphrum Alchemists.

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Publication Details

Journal
Zenodo (CERN European Organization for Nuclear Research)
Published
2026-02-13
DOI
https://doi.org/10.5281/zenodo.18647318
Primary Topic
Ethics and Social Impacts of AI
Type
article
Field-Weighted Citation Impact
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article

The Five Beacons Model: A Prudential Architecture for AI Explainability and Legal Liability in Banking

JM García-Maceiras
Zenodo (CERN European Organization for Nuclear Research)
Ethics and Social Impacts of AI
article

The Five Beacons Model: A Prudential Architecture for AI Explainability and Legal Liability in Banking

JM García-Maceiras
article en

Abstract

The accelerated integration of Artificial Intelligence (AI) into core banking functions has generated a structural tension between algorithmic opacity and established prudential and liability frameworks. This paper introduces the Five Beacons Model (5B), a vertical, liability-oriented governance architecture designed to ensure decision-centric traceability across five institutional nodes: machine interface, engineering layer, human supervision, corporate governance, and client communication. By reframing explainability as an evidentiary infrastructure, the 5B model aims to mitigate legal exposure and strengthen systemic resilience within the Supervisory Review and Evaluation Process (SREP) and the Internal Capital Adequacy Assessment Process (ICAAP). A conceptual and prudential addendum to the Five Beacons Model as developed in the monograph: Garcia-Maceiras, JM (2026). 'The Banking Risk of AI Explanation: The Five Beacons Model'. ADR Notebooks No. 1. Zyphrum Alchemists.

Zenodo (CERN European Organization for Nuclear Research)
Industry, innovation and infrastructure
Openalex Percentile: Top 57%
Ethics and Social Impacts of AI
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