A global financial watchdog is calling on banks to increase their oversight of agentic AI.
The Financial Stability Board (FSB) made that call in a report published Thursday (Oct. 15) outlining proper practices for adopting artificial intelligence (AI).
“As adoption expands in scale and sophistication, AI may also amplify existing risks and introduce new ones, with implications for financial stability,” per the report, titled “Sound Practices for Responsible Adoption of Artificial Intelligence.”
“For example, less explainable models can undermine transparency, while highly autonomous agentic AI systems may act unpredictably or outside intended boundaries, potentially resulting in unauthorized or erroneous actions, data security incidents and disruption to connected systems. Some advanced models may also materially increase the speed and scale of cyber attacks,” the report added.
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Four of the recommended practices stress the importance of company-wide AI governance for financial institutions adopting the technology. This includes the key role the board and senior management play in “setting the overall approach and providing oversight so that AI adoption is aligned with the financial institution’s business model, risk appetite and strategy.”
The remaining eight practices cover a framework for managing AI risks from inception to retirement, focusing on things like the “effective and systematic assessment of the materiality and risks associated with AI use cases at inception and thereafter” and selecting appropriate AI technologies and data governance.
The report argues responsible adoption of artificial intelligence can also lessen risks to financial stability, and says financial institutions also need to recognize “the risks of not adopting AI such as reduced competitiveness and diminished capacity to detect and manage cyber threats.”
The FSB has also pulled earlier guidance published in July telling financial institutions to treat AI as “synthetic employees.” Now, the watchdog said banks should understand “AI agents do not reason like humans” and could interpret pre-defined goals in ways that are unexpected.
“The actions and capabilities of agents can also change over time, especially if they gain access to new tools or receive new prompts,” the report added.
Recent PYMNTS Intelligence research has found that 95% of large financial services firms have widely deployed or embedded newer AI tools in data and technology processes.
Still, there’s room for more integration, with research from another PYMNTS Intelligence showing a 25% adoption rate for artificial intelligence in API orchestration and integration, with 30% of surveyed financial services firms pointing to data quality and fragmentation as their largest obstacles to further AI deployment.
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