Dive Brief:
- The Fintech Open Source Foundation, called FINOS, launched a coordinated effort to unite the banking industry and technology providers around vendor-neutral AI adoption standards for financial services companies, according to a Tuesday announcement.
- Several global banking heavyweights, including BMO, Citi, Morgan Stanley and RBC will work with hyperscalers AWS, Microsoft and Google Cloud to establish Common Controls for AI Services, the nonprofit industry organization said in the announcement. Goldman Sachs and Red Hat are also supporting the project.
- As the financial industry ramped up AI adoption, FINOS members formed an AI readiness working group to deliver the first draft of a risk mitigation framework last year. Those efforts are ongoing and will remain separate from the controls initiative, which will aim to produce a real-time compliance validation toolkit for developers, the organization said.
Dive Insight:
In the absence of clear and consistent regulatory oversight of AI and its commercial use, banks are forging open-source adoption standards that can be applied across the financial industry.
The mobilization around AI mirrors a successful campaign spearheaded by Citi to rationalize compliance, resilience and security standards for public cloud deployments.
With broad support from financial services firms and technology providers, FINOS open sourced its Common Cloud Controls in October 2023. The protocol unified controls across major providers and created standard classifications for common cloud services and threats.
Many of the cloud concerns FINOS addressed were also raised by the U.S. Department of the Treasury, which launched a Cloud Services Steering Group in May 2023 to establish a common lexicon for financial institutions and regulators and create safe migration roadmaps for the industry.
The Treasury Department weighed in on AI adoption in banking, too, issuing a March 2024 report warning of cyber risks and recommending financial firms adhere to compliance with existing laws and regulations.
While laws pertaining to transaction reporting, data privacy and other banking functions abound, the AI regulatory climate has cooled under President Donald Trump.
The current administration, which has taken a laissez faire position on the technology, proposed a 10-year freeze on AI regulatory action by individual states. The moratorium was narrowly approved by the House of Representatives last month and cleared a procedural hurdle in the Senate Saturday.
FINOS is hoping that clearer standards will clear a path for its members to scale the technology.
“This global collaboration reflects growing recognition across the financial ecosystem that proprietary or fragmented approaches are insufficient to address the shared challenges posed by AI adoption in regulated markets,” the organization said.
