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This is supposed to be a newsletter about banking, but it might as well be about artificial intelligence this past week. Some bankers have ruefully confided that they’re spending a lot on AI with the outlays so far outrunning the payback, but from what we hear, we’d better get used to it.
Michelle Bowman, the Federal Reserve’s new top watchdog, vows change is coming to ease rules that govern AI and crypto, and she encourages the industry and regulators to embrace them and other new financial technologies if they don’t want the role of banks in the economy to diminish. (It’s probably worth paying attention, since Bowman might wind up being the next Fed chair.) Err, just one thing: The embrace of tech is quite slippery because new apps make it so easy for digital-native customers to take their business elsewhere.
Also on the AI front, Wall Street quants and financial academics are clashing over whether trading models work better if they’re more complex. JPMorgan Chase and Mitsubishi UFJ Financial are corralling a massive loan to build an equally humongous data center campus in Texas to support AI deployment.
Simple human stuff still matters, too. “Paying our colleagues correctly is an absolute priority,” says National Australia Bank. Seems pretty basic to The Monitor, but the bank had to reaffirm this concept in a public apology after its system underpaid the staff, and not for the first time. — Rick Green
