European banking executives assert that the rise in artificial intelligence will increase banks’ reliance on large US tech companies. Consequently, this poses new risks to the sector.
Since the release of OpenAI’s popular chatbot ChatGPT in late 2022, banks have been exploring ways to implement generative AI. This has sparked a great deal of excitement about the application of artificial intelligence (AI) in financial services. AI is already widely utilized for identifying fraud and money-laundering.
During a meeting of fintech executives this week in Amsterdam, several expressed worries that banks will become even more dependent on a limited number of tech suppliers. This concern arises due to the amount of processing power required to build AI capabilities.
Bahadir Yilmaz, the chief analytics officer of ING and head of the Dutch bank’s artificial intelligence efforts, told Reuters that he anticipated relying “more and more going forward” on Big Tech firms for equipment and infrastructure.
“You will always need them because sometimes the machine power that is needed for these technologies is huge. It’s also not really feasible for a bank to build this tech,” he said.
According to ING’s Yilmaz, banks’ reliance on a limited number of IT firms is “one of the biggest risks.” He emphasized that European banks in particular needed to make sure they could switch between alternative tech suppliers and prevent “vendor lock-in.”
Last year, the British government suggested regulations to control how much financial corporations depend on outside technology giants like Amazon, Microsoft, Google, IBM, and IBM. Authorities are concerned that issues at one cloud computing provider can possibly cause numerous financial institutions’ services to go down.
“AI requires huge amounts of compute and really the only way that you’re going to be able to access that compute (computing power) sensibly is from Big Tech,” Joanne Hannaford, who leads technology strategy at Deutsche Bank’s corporate bank, told an audience at the Money20/20 conference earlier this week.
The main topic of discussion at the Amsterdam conference was AI.
The CEO of Mistral AI, the French AI firm often likened to OpenAI, asserts that there are “synergies” between GenAI products and financial services. These synergies highlight the potential for collaboration and innovation within the industry.
“We see a lot of opportunities in creating analysis and monitoring information … which is really something that bankers like to do,” Arthur Mensch stated.
ING is in the process of testing an AI chatbot that handles 2.5 percent of incoming customer support discussions. In response to a question about when the chatbot would be able to handle at least 50% of customer support calls, Yilmaz predicted within a year.
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