AI push is putting banks at mercy of tech firms, warns Moody’s

Finance sector will gain from the tech but it will need substantial investment and create risks, says rating agency The rating agency Moody’s has said the race to adopt AI is putting big banks at the mercy of a small group of Silicon Valley firms, leaving them vulnerable to widespread outages and price gouging by profit-hungry tech bosses. The financial sector’s efforts to integrate AI into day-to-day operations will eventually cut costs and increase revenues across the City and Wall Street, Moody’s said. But that will require “substantial investments”, and with so many rivals racing towards the same goal, many of those benefits will end up being “competed away”. AI will also create bigger risks around data privacy, cybersecurity, fraud and so-called “deposit flight”, as well as an overdependence on a small number of tech firms, the rating agency warned. That will raise concerns for bosses across the financial sector. 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. They are mostly using it to automate administrative tasks or even h