Banking watchdogs ramp up AI scrutiny as stability fears mount
JPM•U.S. regulators are asking banks about safeguards for agentic AI, foreign-developed models and cyber risks, while European supervisors are urging stronger recovery plans. The ECB gave lenders an end-October deadline to prepare plans to counter AI-enabled cyber threats.
1. U.S. inquiries focus on AI
The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation are asking banks about their use of advanced AI, including whether they use AI agents in cyber defense and how they control and audit autonomous systems. Regulators are gathering information and have not yet prescribed what lenders should do.
2. European recovery planning
UK supervisors are encouraging the largest banks to examine independent recovery systems that could operate if primary systems are compromised. The ECB set an end-October deadline for lenders to produce plans addressing AI-enabled cyber threats, including improved backup and recovery.
3. Growing concerns
Supervisors are also asking banks to map AI use across their businesses and third-party providers, identify dependencies, and ensure systems can be switched off and restarted in a controlled manner. A senior executive at a large European bank said major damage to banking and financial markets could occur “within six months.”
