TECH & AI
They have four lines of defence already in place for new technology , especially for predictive AI or machine learning .
“ The first line of defence is to ask : Just because we can do it , should we ? Every employee in every financial firm is tasked with answering that question and understanding that they must be responsible if they decide to implement any new tech ,” continues Malcolm .
With the fiduciary responsibility put on financial firms , this has , in essence , created a ‘ table stacks ’ process they must all go through .
The next layer of defence is model validation . Proving that the model will do no harm and will generate accurate , fair , and responsible insights and predictions .
Malcolm says : “ Last year was the year of experimentation from leading firms , and they looked at recalibrating their control framework for generative AI , having conversations with regulators around how it works , how varying inputs impact the outputs , and how to explain how a model operates responsibly .”
The third layer of defence is governance , and the fourth is risk management . Banks must ensure they focus on their exposures based on everything happening in the world .
“ That requires understanding beyond just tabular data ,” Malcolm notes . “ It requires looking at unstructured data , looking at breaking news , looking at fundamental data ,
“OPEN SOURCE MODELS ALLOW FIRMS TO NOT HAVE TO GO OUT AND BUILD THEIR OWN FOUNDATIONAL MODEL ”
MALCOLM DEMAYO VP OF GLOBAL FINANCIAL SERVICES , NVIDIA
looking at social sub-forms and paying attention to satellite images , which is quite a bit of work and requires a lot of experimentation .”
AI is here to stay So , while there has been a lot of hype around the adoption of Gen AI at banks , Malcolm is definitive : “ It ’ s here and it ’ s here to stay .”
He concludes : “ This is for real . In 2024 , we ’ re starting to see production-based large language models pop up , and you ’ re probably going to start seeing more as the year progresses . This will be the year when we start to see models get into production , as AI assistance , computer code generators , process automators , and co-pilots , all requiring a human in the loop to make final decisions , but it will keep growing as we head into 2025 .”
140 August 2024