Moody's warns banks' AI adoption concentrates risk in few providers
Moody's is raising a flag about banks leaning heavily on AI.
While more than 75% of City companies now use AI, according to a UK Treasury select committee report published in January, with insurers and international banks among the biggest adopters, Moody's warns this trend puts too much power in the hands of a few tech providers, making the whole system vulnerable if something goes wrong.
Banks try open-source tools
Moody's points out that relying on outside technology comes with risks like data leaks, cyber fraud, and even people moving their money elsewhere.
They also predict there was a 20% chance that, by 2030, AI will be able to do the work of a "solid mid-level employee."
To keep things safer, banks are trying open-source tools and partnerships.
Regulators might increase their focus on operational resilience and third-party concentration in the AI model stack, to avoid major disruptions if any one provider fails.