1. International Collaboration on AI Safety: Governments and international organizations are recognizing the need for harmonized approaches to AI safety, leading to increased international collaboration and the establishment of AI safety institutes (AISIs).
2. Role of AI Safety Institutes (AISIs): AISIs are becoming crucial in harmonizing safety standards and building consensus on what constitutes safe AI. These institutes serve as resource centers, conduct technical evaluations, and facilitate dialogue between governments and industries.
3. Formation of the International Network of AI Safety Institutes (INASI): INASI was launched to unite AI safety efforts from multiple countries, including Australia, Canada, the EU, France, Japan, Kenya, Singapore, South Korea, the UK, and the U.S. INASI aims to collaborate with the global scientific community, develop testing frameworks, and promote inclusivity in AI safety standards.
4. National Variations and Challenges: There are variations in the establishment and authority of AISIs across different countries, which complicates coordinated efforts. Some countries, like Canada, have made significant investments in their AI safety strategies, while others are still in the process of setting up their AISIs.
5. Ongoing and Future Work: Collaboration among AISIs is already underway, with joint technical reports and pre-deployment testing of AI systems being conducted. Future cooperation is expected, especially with upcoming international summits.
6. Impact on the Financial Services Industry: The work of AISIs, particularly in identifying potential risks before AI systems are deployed, is crucial for financial services firms to ensure compliance with regulatory requirements and minimize exposure to emerging threats.
7. Proliferation of National-Level AI Policies: Countries are developing their own AI policies, which may lead to regulatory fragmentation and challenges for multinational firms in understanding and fulfilling compliance obligations.

AI Takes Center Stage: Survey Reveals Financial Industry’s Top Trends for 2024

Summary

Focus

Advances in digital technology have transformed people's lives in recent decades. But large swathes of the financial system are stuck in the past. Many transactions still take days to complete and rely on time-consuming clearing, messaging and settlement systems and physical paper trails. Improving the functioning of the financial system is thus an important public policy objective. But building a financial system fit for the future requires a vision for what we want to achieve.

Contribution

We propose the concept of the "Finternet" as a vision for the future financial system: multiple financial ecosystems interconnected with each other – much like the internet. The Finternet would be designed to empower individuals and businesses by placing them at the centre of their financial lives. Unified ledgers are a promising vehicle to turn this vision into reality. Grounded on a digital-first approach and leveraging tokenisation, unified ledgers would improve existing financial transactions, but also make entirely new financial products and transactions possible. We describe the economic rationale for the Finternet as well as its required technical, regulatory and legal building blocks. In addition, we lay out eight fundamental design considerations that we feel should be a core part of the future financial system.

Findings

We identify three necessary components: an efficient economic and financial architecture, the application of cutting-edge digital technology and a robust legal and governance framework. Unified ledgers are a promising vehicle to deliver on all three. In particular, by bringing together multiple financial assets in a single venue, they could vastly reduce the need for lengthy messaging and clearing processes, thereby delivering more efficient and reliable services for users.

Abstract

This paper lays out a vision for the Finternet: multiple financial ecosystems interconnected with each other, much like the internet, designed to empower individuals and businesses by placing them at the centre of their financial lives. It advocates for a user-centric approach that lowers barriers between financial services and systems, thus promoting access for all. The envisioned system leverages innovative technologies such as tokenisation and unified ledgers, underpinned by a robust economic and regulatory framework, to dramatically expand the range and quality of financial services. This integration aims to foster greater participation, offer more personalised services and improve speed and reliability, all while reducing costs for end users. Most of the technology needed to achieve this vision exists and is fast improving, driven by efforts around the world. This paper provides a blueprint for how key technical characteristics like interoperability, verifiability, programmability, immutability, finality, evolvability, modularity, scalability, security and privacy can be incorporated, and how varied governance norms can be embedded. Delivering this vision requires proactive collaboration between public authorities and private sector institutions. The paper serves as a call for action for these entities to establish a strong foundation. This would pave the way for a user-centric, unified and universal financial ecosystem brought into the digital era that is inclusive, innovative, participatory, accessible and affordable, and leaves no one behind.

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The game-changer: How generative AI can transform the banking and financial sectors

The most essential question of the moment: how can AI help address and course-correct banks’ productivity and financial performance?

• Almost 8 in 10 institutions (78%) are tactically implementing generative AI for at least one use case. Their tactical approaches vary but trend higher in the risk and compliance space, as well as in client engagement. Additionally, 8% of institutions take a broader, more systematic approach by implementing generative AI across a wider set of business domains scaling throughout the bank.
• AI priorities reflect omnipresent concerns about risk—and client relationships. Almost 60% of generative AI decision makers see higher value in risk control, compliance reporting, and client engagement. Keeping data private and earning client trust is essential to winning engagements.
• AI governance is a must-have. Every banker should be an AI risk manager. More than 60% of banking CEOs indicate new vulnerabilities for cybersecurity (76%), legal uncertainty related to operations (72%), difficulties in controlling outcome accuracy (67%), and prejudice from model bias (65%).

This report was produced by IBM Institute for Business Value (IBV), specialist provider of Research-backed, technology-informed strategic insights that help you make smarter business decisions.