European bank executives have stated that the boom in artificial intelligence will increase banks' dependence on large American tech companies, introducing new risks to the industry.
Since OpenAI launched the wildly successful chatbot ChatGPT at the end of 2022, there has been a surge of interest in artificial intelligence within the financial services sector. Banks are beginning to explore how to deploy generative AI, although AI has already been widely used for fraud and money laundering detection.
However, at the fintech executives' conference held in Amsterdam this week, some participants expressed concerns that the computing power needed to develop AI capabilities would make banks even more dependent on a few tech suppliers.
Bahadir Yilmaz, Chief Analyst at ING, told Reuters that he expects future reliance on the infrastructure and equipment provided by large tech companies to grow.
"You always need them because sometimes the computing power required by these technologies is so vast that it is not practical for banks to develop this technology on their own," he said.
Yilmaz indicated that the dependency on a small number of tech companies is "one of the biggest risks," stressing that European banks need to ensure the ability to switch between different tech suppliers to avoid the so-called "vendor lock-in."
Last year, the UK proposed regulations to address the heavy reliance of financial companies on external tech firms such as Microsoft, Google, IBM, and Amazon. Regulators are concerned that an issue with a single cloud computing company could lead to service disruptions for many financial institutions.
Joanne Hannaford, Head of Technology Strategy for Corporate Banking at Deutsche Bank, told attendees at the Money20/20 conference that, "AI requires enormous computing power, and the only realistic way to access this computing power is through large tech companies."
Artificial intelligence was a focal point on the agenda at the Amsterdam conference.
Arthur Mensch, CEO of the French AI startup Mistral AI, which is seen as France's response to OpenAI, told attendees that there is "synergy" between their generative AI product and the financial services sector.
"We see many opportunities in creating analytics and monitoring information... this is precisely what bankers love to do," said Arthur Mensch.
