Good morning. Financial services is one the world’s most heavily regulated industries, and the stakes are high when it comes to generative AI. Some of the largest banks, fintechs, and even tech firms are coming together to form a group to get everyone on the same page.
The AI Readiness for Financial Services Industry Special Interest Group, or SIG, is launching through the Fintech Open Source Foundation, or FINOS, a hub for open innovation in finance. On the agenda? Deploying generative AI.
FINOS members have signed on to advance this initiative, led by Citi, Scott Logic, Morgan Stanley, and ControlPlane. Databricks is an executive sponsor. Other FINOS members—including the London Stock Exchange Group, Publicis Sapient, and EPAM—are participating alongside new FINOS members such as Microsoft and Provectus.
Morgan Stanley chairs FINOS’ Open Source Readiness Special Interest Group, which will provide the blueprint for the AI Readiness SIG, Trevor Brosnan, global head of technology strategy, architecture, and modernization at Morgan Stanley, told me.
“We’re going to look at common challenges we all face—whether it’s developing threat models, risk frameworks, mitigation of those risks—all the things that we need to address with financial services firms to onboard this technology,” he explained. “FINOS is that great kind of neutral location where we can discuss them.”
The AI Readiness SIG could be useful for any financial institution looking to deploy generative AI, including national and even regional banks, Brosnan said.
Ian Micallef, head of developer enablement at Citi, told me that the initiative’s organizers are currently “at the stage of gathering interest and putting together a core group who are going to be able to commit the time and resources to move this forward.”
“It seems prudent that we don’t do that in isolation, and that we come together and try to do that as a group,” Micallef added. “The beauty of open source is that you are getting access to ideas beyond the boundaries of your organization.”
When it comes to creating an AI framework, there’s really no competition between banks, Micallef said. “I put it akin to fire safety,” he added. “There’s no firm in the world that wants their competitor to have a fire safety issue.”
‘Part of the future’
More than a year ago, when ChatGPT first came on the scene, some major companies including financial institutions imposed restrictions on employees using generative AI. But the business case for harnessing the technology quickly became evident.
“Overall, the risks of not embracing generative A.I. far outweigh the risks of engaging with it,” Citi CEO Jane Fraser wrote in a LinkedIn post in July.
Financial services leveraging AI isn’t necessarily new, but large language models are making the tech available to everyone, Micallef said. “It’s certainly going to be part of the future, just like Excel and other tools in the past have been transformative for CFOs.”
Morgan Stanley views AI as a mechanism to augment humans, Brosnan told me. “We look at it as, ‘How can we help our financial advisors do what they do best, which is to serve their clients more effectively or efficiently at scale?’” Brosnan explained. Having machines to “do the work of synthesizing and organizing insights and knowledge” allows “humans to create those ideas in the first place,” he said.
Sheryl Estrada
sheryl.estrada@fortune.com
María Soledad Davila Calero curated the Leaderboard and Overheard sections of today’s newsletter.
Big deal
The latest “Accenture Pulse of Change” is a quarterly C-suite survey examining how business, talent, and technology trends are shaping and driving change.
A key finding is most C-suite leaders (85%) say they anticipate achieving growth in 2024. Thirty-eight percent expect "strong growth” (greater than 5%) for their organizations in 2024, an increase from 26% who thought the same six months ago. But the percentage of C-suite leaders who now project any growth (up to 5%) has fallen by 20% in six months—67% vs 47%.
When it comes to technology, 85% are focused on increasing generative AI investments and 60% of organizations are prioritizing investments in strengthening their digital core. However, C-suite executives cite adapting to advancements in technology as their top area of concern in 2024.
Leaderboard
Mary Kay Fenton was named CFO at Cullinan Therapeutics (Nasdaq: CGEM), a biopharmaceutical company. Fenton was previously CFO at Achillion Pharmaceuticals and Semma Therapeutics, where she also served as COO. Most recently, Fenton served as interim CEO and CFO at Talaris Therapeutics.
Thomas “Tommy” Leggett was named CFO at Stoke Therapeutics (Nasdaq: STOK), a biotechnology company. Leggett succeeds Stephen Tulipano, who was at the CFO when the company went public. Leggett has years of experience serving as a CFO for life science companies, including Affinia Therapeutics and Black Diamond Therapeutics.
Going deeper
The new report, Fueling the Internal Audit Student Talent Pipeline: Perspectives from Educators and Practitioners was released at the Global Student Conference by the Internal Audit Foundation.
The Internal Audit Foundation, in partnership with Deloitte, conducted surveys and had discussions with internal audit hiring managers and collegiate educators on the profession’s talent pipeline. The recruitment and hiring landscape for internal audit must evolve to ensure the profession keeps pace with a changing risk environment.
Overheard
“I think what we’re seeing here is I’m starting to get whiffs of stagflation, dare I say. I know that’s a dirty word in a lot of circles.”
Steve Sosnick, chief strategist at Interactive Brokers, said on Bloomberg TV. Sosnik is adding to the chorus of analysts who argue the U.S. economy is seeing the worst of both worlds when it comes to growth and inflation levels.
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