EU banks’ increasing reliance on US tech giants for AI raises concerns
European banks are urged to avoid ‘vendor lock-in’ and ensure they can switch between different providers. British regulators have proposed rules to regulate reliance on external technology companies.
According to European banking executives, the rise of AI is increasing banks’ reliance on major US tech firms, raising new risks for the financial industry. AI, already used in detecting fraud and money laundering, has gained significant attention following the launch of OpenAI’s ChatGPT in late 2022, with banks exploring more applications of generative AI.
At a fintech conference in Amsterdam, industry leaders expressed concerns about the heavy computational power needed for AI, which forces banks to depend on a few big tech providers. Bahadir Yilmaz, ING’s chief analytics officer, noted that this dependency on companies like Microsoft, Google, IBM, and Amazon poses one of the biggest risks, as it could lead to ‘vendor lock-in’ and limit banks’ flexibility. These facts also imply the strong impact AI could have on retail investor protection.
Britain has proposed regulations to manage financial firms’ reliance on external tech companies, reflecting concerns that issues with a single cloud provider could disrupt services across multiple financial institutions. Deutsche Bank’s technology strategy head, Joanne Hannaford, highlighted that accessing the necessary computational power for AI is feasible only through Big Tech.
The European Union’s securities watchdog recently emphasised that banks and investment firms must protect customers when using AI and maintain boardroom responsibility.
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