The artificial intelligence boom will boost banks’ dependence on vast U.S. technology companies, creating modern risks for the industry, European banking executives say.
Interest in the apply of artificial intelligence (AI) in financial services – already widely used to detect fraud and money laundering – has increased since the launch of the viral OpenAI ChatGPT chatbot in slow 2022, as banks explore ways to implement generative AI.
But this week at a meeting of fintech executives in Amsterdam, some raised concerns that the amount of computing power needed to develop artificial intelligence capabilities would make banks even more reliant on a tiny number of technology providers.
ING chief analytics officer Bahadir Yilmaz, who is responsible for artificial intelligence work at the Dutch bank, told Reuters he expected to rely “increasingly in the future” on Huge Tech companies for infrastructure and machinery.
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“They will always be needed because sometimes the machine power needed to apply these technologies is enormous. It is also unfeasible for a bank to build such technology,” he said.
Banks’ dependence on a tiny number of technology companies was “one of the biggest risks,” said ING’s Yilmaz, emphasizing that European banks in particular must ensure they can move between different technology providers and avoid, as he put it, “vendor lock-in.”
Last year, Britain proposed legislation to regulate financial firms’ bulky reliance on third-party technology companies such as Microsoft, Google, IBM and Amazon. Regulators fear that problems at one cloud computing company could potentially result in reduced services for many financial institutions.
“Artificial intelligence requires enormous amounts of computing power, and really the only way you can get reasonable access to that computing power (computing power) is from Huge Tech,” said Joanne Hannaford, who heads technology strategy at corporate bank Deutsche Bank. audience at the Money20/20 conference held earlier this week.
Artificial intelligence was the main topic of the conference in Amsterdam.
The CEO of French AI startup Mistral AI, seen as France’s answer to OpenAI, told participants there are “synergies” between genAI’s products and financial services.
“We see a lot of opportunity in creating analytics and monitoring information… which is really something bankers like to do,” Arthur Mensch said.
ING is testing an AI chatbot currently used in 2.5% of incoming customer service calls. When asked how long it would be before the chatbot could handle half or more of its customer service calls, Yilmaz said within a year.
In its first statement on artificial intelligence, the EU’s securities watchdog said last week that banks and investment firms cannot shirk their management responsibilities and have a legal obligation to protect customers using artificial intelligence. He warned that the technology was likely to have a significant impact on the protection of retail investors.
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