European banks worry about US Big Tech control over AI

To say that artificial intelligence (AI) is the current hot ticket would be an understatement. The technology has become so pervasive so quickly it even managed to dominate many of the stages at the recent Money 20/20 show in Amsterdam.

European banks worry about control over AI

However, as with all things tech, it is feared that the boom in AI will increase banks’ dependence on big US tech firms, creating new risks for the industry, according to a number of European banking executives that attended the event.

This is an especially touchy subject with European regulators who are currently trying desperately to wrestle control away from US tech giants – at least in the borders with their control.

Excitement around using AI in financial services – widely used already for detecting fraud and money-laundering – has soared since the launch of OpenAI’s viral chatbot ChatGPT in late 2022 as banks examine ways to deploy generative AI.

On the stage

But the executives gathered in Amsterdam expressed concerns that the amount of computing power needed to develop AI capabilities would make banks rely even more on small number of tech providers.

ING’s chief analytics officer, Bahadir Yilmaz, who is in charge of the Dutch bank’s AI work, told Reuters he expected to rely on Big Tech companies “more and more going forward”, for infrastructure and machinery.

“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.

Banks’ dependency on a small number of tech companies was “one of the biggest risks”, Yilmaz said, emphasising that European banks in particular needed to ensure they could move between different tech providers and avoid what he called “vendor lock-in”.

The UK, last year proposed rules to regulate financial firms’ heavy reliance on external technology companies, such as Microsoft, Google, IBM and Amazon.

Regulators are worried that problems at a single cloud computing company could potentially bring down services across many financial institutions.

“AI requires huge amounts of computing power and really the only way that you’re going to be able to access that sensibly is from Big Tech,” Joanne Hannaford, who leads technology strategy at Deutsche Bank’s corporate bank, told an audience at the Money 20/20.

Hannaford said that there are requirements for the bank to notify regulators when they move data into the cloud, which could become much more complicated as the use of cloud computing increases.

Banks also need to communicate to regulators the risk of not leveraging cloud computing’s power, which would be an opportunity cost, she added.

Arthur Mensch, CEO of French AI startup Mistral AI, seen as France’s answer to OpenAI, told attendees there were “synergies” between its GenAI products and financial services.

“We see a lot of opportunities in creating analysis and monitoring information… which is really something that bankers like to do,” Mensch said.

ING is testing an AI chatbot currently used for 2.5% of incoming customer service chats. Asked how long it would be until the chatbot could handle half or more of customer service conversations, Yilmaz said within a year.

In its first statement on AI, the European Union’s securities watchdog said last week that banks and investment firms cannot shirk boardroom responsibility and have a legal obligation to protect customers when using AI.

It warned that the technology is likely to have significant impact on retail investor protection.

It remains to be seen what European regulators will do in this area but I get the feeling they will make sure that a protectionist layer is built in for the European banks and consumers.


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