The Financial Stability Board (FSB), a body that regulates the global financial system, has repeated its warning on the dangers of financial institutions relying on a few technology companies for the integration of artificial intelligence (AI) into their business.
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FSB said such concentration risks “appear to be more prevalent” in generative AI (GenAI), even as adoption of this specific AI model “remains high” in finance. This risk ripples across the entire supply chain for GenAI, from hardware and cloud computing to training data and AI model developments.
Concentration Risks Highest in Chip Market
According to the FSB, the hardware market where AI-powered chips are made and sold poses the greatest risk in the entire supply chain. However, the cloud computing space for AI is also “significantly concentrated” among a few global tech providers, it said.
“If financial institutions increasingly deploy AI in core business lines and critical operations, then operational disruptions could have more impact if reliance is placed on a few providers,” noted the international body in its latest report. “High levels of concentration in the AI supply chain could limit substitutability given the small number of alternative service providers in the market and thus amplify vulnerabilities.”
FSB initially sounded a similar alarm earlier in November.
Big Tech Goes on AI Investment Spree
The global regulator’s latest report comes as Big Tech companies in recent weeks have shaken hands over mouth-watering deals to shape the future of the AI industry.
For instance, in late September, giant chip designer Nvidia (NVDA) sealed a $100 billion deal with AI startup OpenAI (PC:OPAIQ). Enterprise software colossus Oracle (ORCL) also recently signed a massive $300 billion cloud computing deal with the same startup.
These grand investments have led to warnings from both public authorities such as the Bank of England, and private analysts and stakeholders of the possibility of an AI bubble that could hurt stock markets. However, others have doubted if there is a reason to be overly concerned yet.
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