Big banks are talking up generative A.I. — but the risks mean they’re not diving in headfirst
The GPT-4 logo is seen in this photo illustration on 13 March, 2023 in Warsaw, Poland.
Jaap Arriens | Nurphoto | Getty Images
AMSTERDAM, Netherlands — Major banks and fintech companies claim to be piling into generative artificial intelligence as the hype surrounding the buzzy technology shows no signs of fizzling out — but there are lingering fears about potential pitfalls and risks.
At the Money 20/20 fintech conference in Amsterdam, Netherlands, executives at large lenders and online finance firms sang the praises of generative AI, calling it an “explosion of innovation,” and saying it will “unleash innovation in areas that we can’t even think about.”
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Chalapathy Neti, head of AI at global bank messaging network Swift, described the progress made with ChatGPT and GPT-4 as “mind-boggling.” He added, “This is truly a transformative moment.”
But in the short term, banks are scrambling to figure out the use cases.
The Netherlands’ ABN Amro is one banking giant that’s piloting the use of generative AI in its processes.
Annerie Vreugdenhil, chief commercial officer of ABN Amro’s personal and business banking division, revealed on a panel that it is using the technology to automatically summarize conversations between bank staff and customers. It’s also using it to help its employees gather data on customers to assist with answering queries and avoid repetitive questions.
The bank is now in the process of scaling these pilots to 200 employees and is exploring a number of new pilots to start this summer.
In a closed-door session on the application of AI in financial services, meanwhile, two banking executives explained how they’re using the technology to improve their internal code and analyze how their clients are behaving.
“We are experimenting at this stage and we don’t have necessarily anything client facing but we are using the [tech the] same as other companies, for example, code refactoring, comms calls, the other way around,” said Mariana Gomez de la Villa, an executive at ING Bank specializing in strategy and innovation.
Indeed, the banks appeared unanimous in their hesitation to roll out ChatGPT-like tools to customer-facing scenarios.
Jon Ander Beracoechea Alava, advanced analytics discipline head at Spanish bank BBVA, said that the lender had taken a “conservative approach” to AI, adding that, at this stage, generative AI is “still early” and “immature.”
A crucial issue is that advanced AI systems require the processing of huge volumes of data — a sensitive commodity wrapped up in all kinds of rules and regulations. As such, Alava said that at this stage it was too “risky” to involve sensitive information from customers.
Generative A.I., explained
Generative AI is a specific form of AI that is able to produce content from scratch. The systems take inputs from the user and feed them into powerful algorithms fueled by large datasets to generate new text, images and video in a way that’s more humanlike than most AI tools already on the market.
The technology was thrust into the spotlight following the success of OpenAI’s GPT language processing technology. ChatGPT, which uses massive language models to create human-sounding responses to questions, has ignited an arms race among some companies over what is seen as the next “paradigm shift” in tech.
In March, Goldman Sachs‘ chief information officer, Marco Argenti, told CNBC the bank is experimenting with generative AI tools internally to help its developers automatically generate and test code.
More recently, in May, Goldman spun off the first startup from the bank’s internal incubator — an AI-powered social media company for corporate use called Louisa. The push into AI is part of a larger effort by CEO David Solomon to expedite the bank’s digital makeover.
Morgan Stanley, meanwhile, is using it to inform its financial advisors on queries they may have. The bank has been testing an OpenAI-powered chatbot with 300 advisors so far, with a view to ultimately aid its roughly 16,000 advisors in making use of Morgan Stanley’s repository of research and data, according to Jeff McMillan, head of analytics and data at the firm’s wealth management division.
A.I. ‘co-pilot’
These are just some examples of how financial firms are using AI, but more as a digital helper than as a core part of their services.
Gudmundur Kristjansson, CEO and co-founder of Icelandic regulatory technology firm Lucinity, showed CNBC how artificial intelligence can be used to assist with a key area in finance: fighting crime.
An AI tool the company created, called Luci, aims to help compliance professionals with their investigations. In a live demonstration, Kristjansson showed himself looking into a money laundering case. The AI tool analyzed the case and described what it saw and then completed an independent review.
In this use case, the AI acts as more of a resource — or “copilot” — to help an employee find data and flesh out a case rather than replace the role of a person looking into reports of suspicious activity.
“Where you find money laundering is through … interconnected networks of people who are basically employed to do it. That’s why it’s so hard to find it. Banks spent this year $274 billion on prevention,” Kristjansson told CNBC in an interview.
He said where Luci helps is by vastly reducing the amount of time spent trying to work out whether something is fraud or money laundering.
The whole appeal of AI to the big banks and fintechs, Money 20/20 attendees said, is the potential reduction in the time and money it takes to complete tasks that can take human employees days.
Niklas Guske, chief operating officer at Taktile, a startup that helps fintechs automate decision-making, acknowledged that the use of AI is challenging in the financial sector, given the lack of publicly available data.
But he stressed that it could be a “crucial” tool to reduce the companies’ operational expenses and improve efficiency.
“In many fintech applications, this is done through an increase in automation and reducing manual processes, especially in onboarding and underwriting,” he told CNBC.
“This automation is truly enabled through access to more data sources, which empower lenders to gain new insights and identify the right customers without having to parse through dozens of PDFs for the right piece of information.”
— CNBC’s Hugh Son contributed reporting.
An Electron rocket launches the Baby Come Back mission from New Zealand on July 17, 2023.
Rocket Lab
Rocket Lab stock soared 8% Monday, building on a strong run fueled by space innovation.
Shares of the space infrastructure company have nearly doubled over the last two months following a slew of successful launches and a deal with the European Union.
The stock is up 63% year to date after surging nearly sixfold in 2024.
Last month, Rocket Lab announced a partnership with the European Space Agency to launch satellites for constellation navigation before December.
Rocket Lab also announced the successful launch of its 66th, 67th and 68th Electron rockets in June. The company successfully deployed two rockets from the same site in 48 hours.
Rocket Lab competes with a growing list of companies in a maturing and increasingly competitive space industry with growing demand. Some of the main competitors in the sector include Elon Musk‘s SpaceX and Firefly Aerospace, which filed its prospectus to go public on Friday.
“For Electron, our little rocket, we’ve seen increased demand over the last couple of years and we’re not just launching single spacecraft — these are generally entire constellations for customers,” CEO Peter Beck told CNBC last month.
He said the company is producing a rocket every 15 days.
Beck, a New Zealand-native, founded the company in 2006. Since its debut on the Nasdaq in August 2021 through a merger with a special purpose acquisition company, the Long Beach, California-based company’s market value has swelled to more than $19 billion.
WATCH: Rocket Lab CEO Peter Beck: One thing I don’t worry about at night is demand
Technology
Anthropic, Google, OpenAI and xAI granted up to $200 million for AI work from Defense Department
A view of the Pentagon on December 13, 2024, in Washington, DC. Home to the US Defense Department, the Pentagon is one of the world’s largest office buildings.
Daniel Slim | Afp | Getty Images
The U.S. Department of Defense on Monday said it’s granting contract awards of up to $200 million for artificial intelligence development at Anthropic, Google, OpenAI and xAI.
The DoD’s Chief Digital and Artificial Intelligence Office said the awards will help the agency accelerate its adoption of “advanced AI capabilities to address critical national security challenges.” The companies will work to develop AI agents across several mission areas at the agency.
“The adoption of AI is transforming the Department’s ability to support our warfighters and maintain strategic advantage over our adversaries,” Doug Matty, the DoD’s chief digital and AI officer, said in a release.
Elon Musk’s xAI also announced Grok for Government on Monday, which is a suite of products that make the company’s models available to U.S. government customers. The products are available through the General Services Administration (GSA) schedule, which allows federal government departments, agencies, or offices to purchase them, according to a post on X.
OpenAI was previously awarded a year-long $200 million contract from the DoD in 2024, shortly after it said it would collaborate with defense technology startup Anduril to deploy advanced AI systems for “national security missions.”
In June, the company launched OpenAI for Government for U.S. federal, state, and local government workers.
WATCH: US needs an allied strategy for AI investment in military and defense: Palantir
Meta CEO Mark Zuckerberg appears at the Meta Connect event in Menlo Park, California, on Sept. 25, 2024.
David Paul Morris | Bloomberg | Getty Images
Meta CEO Mark Zuckerberg on Monday said he plans to invest “hundreds of billions of dollars” into artificial intelligence compute infrastructure, and that Meta plans to bring its first supercluster online next year.
A supercluster is a large, complex computing network that’s designed to train advanced AI models and handle their workloads.
“Meta Superintelligence Labs will have industry-leading levels of compute and by far the greatest compute per researcher,” Zuckerberg wrote in a Facebook post on Monday. “I’m looking forward to working with the top researchers to advance the frontier!”
Zuckerberg said Meta’s first supercluster is called Prometheus, and that the company is building several other multi-gigawatt clusters. One cluster, called Hyperion, will be able to scale up to five gigawatts over several years, he said.
Zuckerberg has been on a multibillion-dollar AI hiring spree in recent weeks, highlighted by a $14 billion investment in Scale AI. He announced a new organization in June called Meta Superintelligence Labs that’s made up of top AI researchers and engineers.
Zuckerberg had grown frustrated with Meta’s progress in AI, especially after the release of its Llama 4 AI models in April received a lukewarm response from developers. He is revamping Meta’s approach to better compete with rivals like OpenAI and Google.
“For our superintelligence effort, I’m focused on building the most elite and talent-dense team in the industry,” Zuckerberg wrote Monday.
WATCH: Meta announces several multi-gigawatt data centers, first planning to come online in 2026
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