As Wall Street banks finance and adopt AI, risks mount on both fronts
JPM•Executives at major U.S. banks highlighted uncertainty over AI infrastructure demand and returns, financing risks, and security threats from autonomous AI agents. Citigroup said AI tools have helped develop products up to 40% faster and cut technology vendor expenses by 30%.
1. Financing the AI buildout
The largest U.S. banks see opportunities in financing AI infrastructure but cautioned that demand for computing power, project returns and local opposition remain uncertain. Wells Fargo CEO Charlie Scharf said the buildout brings risks because of the leverage used to finance it and upward pressure on prices in some industries and supply chains. Goldman Sachs CEO David Solomon said the evolution of capital and computing needs was unclear, while Citigroup CEO Jane Fraser said the bank was not seeing a slowdown in broader AI investment.
2. Banks weigh credit exposure
Bank executives and investors said speculative data-center projects could pose risks if they fail to deliver expected returns, while higher interest rates could raise financing costs and squeeze returns. Morgan Stanley executives said the bank was discerning about risk and focused on avoiding weaker credit standards. Investors also noted that banks may arrange AI-related financing and distribute risk.
3. Productivity and security
Banks are also adopting AI to improve productivity, though JPMorgan CFO Jeremy Barnum said benefits can take time to become visible at an institution of its size. Fraser said Citigroup was developing products at lower cost and up to 40% faster, and coding tools had reduced technology vendor expenses by 30%. Executives also flagged security challenges as AI agents gain the ability to act autonomously; JPMorgan CEO Jamie Dimon said the bank was developing tools to navigate those risks.
