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Yahoo
17 hours ago
- Business
- Yahoo
OpenAI's Altman didn't expect banks to take to AI so soon
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. OpenAI CEO and co-founder Sam Altman was taken aback by the financial sector's early interest in ChatGPT and his firm's other generative artificial intelligence products. 'It's gotten much better, but when we first launched, the thing that the average person thought about AI is that it hallucinated a lot,' he said Tuesday during an on-stage chat with Federal Reserve Vice Chair for Supervision Michelle Bowman at a capital framework conference hosted by the central bank. Although Altman pegged ChatGPT's hallucinations at 0.1% or less, 'that branding kind of stuck with us for a while, so we assumed that financial services … were not gonna be our early adopters,' he said. But some of OpenAI's biggest early enterprise partners were financial institutions. 'Morgan Stanley, Bank of New York, these are major partners of ours that we're doing fantastic work with. And we were kind of like, 'Are y'all sure?' and they were like, 'Yeah, we really want to do this,'' he recalled. These institutions and others figured out how to use the technology, and 'how to structure it enough that they can rely on it' for critical processes, he said. 'The thing that someone said that stuck with me is, 'Hey, we realize this is a new technology and we've got to put some new controls on it. But the risk of us not doing this … is that we don't continue to exist as a business,'' he said. Since Altman and his OpenAI co-founders launched ChatGPT in November 2022, banks have harnessed generative AI to increase productivity and efficiency and to manage vast quantities of customer data. Generative AI should be able to handle up to 40% of daily tasks by year's end, according to bank executives surveyed by KPMG in April, and 57% said generative AI is an integral part of their long-term vision for innovation and remaining relevant. Due to AI, the cost of each unit of intelligence has been driven down 'by more than a factor of 10 each year for the last five years,' and Altman expects that to continue for at least the next five years. He pointed to the saying "Electricity too cheap to meter," adding, 'We didn't quite deliver on that as society [but it does] look like we're about to deliver on 'intelligence too cheap to meter.' The AI boom has been compared to the industrial revolution. JPMorgan Chase CEO Jamie Dimon said it could be as transformative as electricity or the internet. But Altman, in at least one way, implied it's bigger. 'The internet did change a lot of things, but I don't ever remember something that would have cost $10,000 of knowledge work a year ago, costing $1 or 10 cents, or whatever it would cost now. This is just unprecedented,' he said. One thing he did compare AI to, though, was the transistor – a 1947 technological innovation that is now a fundamental part of nearly all modern electronic devices. 'We don't think about this as a transistor device or that as a transistor device – we think of this as like a microphone and a computer and a screen and a camera and whatever else – but this technology was an incredible discovery,' Altman said. 'It changed what we were able to build. It became part of kind of everything pretty quickly. 'You don't talk about companies much as transistor companies … in the same way, I don't think you'll be talking about AI companies for very long,' he said. 'You will just expect products and services to use this technology. You won't think about it that much. You will expect products and services you use to be smarter than you, and that will be a normal part of the world, like the transistor.' But with innovation comes risk. Altman wasn't shy about addressing how AI has created opportunities for fraud. He's 'terrified' that there are some banks that utilize voice recognition technology to verify identity, he said, because 'that is a crazy thing to still be doing; like AI has fully defeated that.' He was referring to deepfake attacks, where cybercriminals use generative AI to copy a person's voice or image and then use that voice or image to commit fraud, which a 2024 survey found has affected one in 10 companies. In the face of deepfake attacks, banks must fight fire with fire and invest more in artificial intelligence themselves, Fed Gov. Michael Barr said in April. The ways that bad actors utilize deepfakes 'is going to get so compelling,' Altman warned Tuesday, that 'people are gonna have to change the way they interact.' 'They're gonna have to change the way they verify,' he said. 'Like this person calling me right now. It's a voice call. Soon, it's gonna be a video FaceTime that's indistinguishable from reality. Teaching people how to authenticate in a world like that, how to think about the fraud impact – this is a huge deal.' Recommended Reading Want to avoid an HMBradley scenario? Diversify your bank network, Treasury Prime CEO says
Yahoo
17 hours ago
- Business
- Yahoo
PNC, Coinbase team up on crypto-as-a-service
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. PNC customers will soon be able to buy, sell and hold cryptocurrency through the bank's new partnership with Coinbase. 'Partnering with Coinbase accelerates our ability to bring innovative, crypto financial solutions to our clients,' said PNC CEO Bill Demchak in a prepared statement Tuesday. 'We will also provide PNC's best-in-class banking services to Coinbase,' he said. 'This collaboration enables us to meet growing demand for secure and streamlined access to digital assets on PNC's trusted platform.' Coinbase is the nation's largest cryptocurrency exchange. As of February, it held nearly half a trillion dollars in assets, which would make it akin to the 21st-largest bank in the country, according to CEO Brian Armstrong. 'If you think of us more like a brokerage, we'd be the 8th largest brokerage today by AUM,' he wrote on social media platform X. Coinbase will support PNC's entry into the digital asset market with its crypto-as-a-service platform, 'which provides PNC with a powerful set of tools to develop a scalable, high-growth business, built on a foundation of uncompromising security,' said Brett Tejpaul, head of Coinbase Institutional, in a prepared statement Tuesday. The distance between the crypto realm and traditional finance has been closing in 2025 due to relaxed regulatory oversight and a push for federal crypto legislation. The GENIUS Act, signed into law by President Donald Trump on Friday, creates a regulatory framework for stablecoins. Meanwhile, the CLARITY Act, which would divide regulatory oversight between the Commodity Futures Trading Commission and Securities and Exchange Commission and create a framework for digital assets, is moving through the legislature. Several crypto-bank partnerships have been inked in recent months. BNY said last week that it would custody the reserves of Ripple's new stablecoin, Ripple USD, weeks after striking a similar partnership with Societe Generale regarding its CoinVertible USD. Digital native bank Green Dot announced a partnership with in May, offering banking and money management tools to the crypto exchange's U.S. customers through Arc, the bank's embedded finance platform. SoFi CEO Anthony Noto also said in May that his firm would re-enter the crypto business, which it exited in 2023, in the next six months. Brad Rustin, chair of law firm Nelson Mullins' financial services regulatory practice in Greenville, South Carolina, told Banking Dive in May that 'lots and lots and lots of banks' are talking about getting in on crypto amidst the Trump administration's regulatory shifts. The interest is largely coming from two verticals, Rustin said: fintech-forward banks that have long had an understanding of crypto assets, and large banks that have sizable securities custodial programs. '[The latter] are banks that did securities lending, that did margin lending, that did traditional custody services for stocks and bonds,' Rustin said. 'They're saying, 'Well, look, this is no different than custodying a stock or a bond. It's just how you actually control it and how you maintain it that's different.'' Recommended Reading Treasury calls for more fintech oversight Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Huntington CFO: Veritex met ‘high bar' for acquisitions
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. As Huntington conducted due diligence on acquisition target Veritex, the Columbus, Ohio-based regional discovered many of the customers it had hoped to snag over time were already clients of the Texas bank. That was just one advantageous aspect of the $1.9 billion deal, announced last week, according to Huntington CFO Zach Wasserman. The $208 billion-asset regional envisions the acquisition serving as a springboard to local business in Texas, given Veritex's presence in the Dallas/Fort Worth and Houston markets. The acquisition of Dallas-based Veritex came together quickly: Huntington management had known Veritex CEO Malcolm Holland for a few years, but deal discussions began in mid-June, Wasserman said. Huntington didn't need to do an acquisition in Texas, Wasserman asserted, since the regional lender now has $6 billion in loans and $2 billion in deposits in the state, but 'what we saw here was very opportunistic.' 'It's something we became very convicted about as we learned more about them, in terms of their culture being incredibly well-aligned, and the strategic growth opportunities for us,' he said. Veritex's commercial clients are largely in the small and medium-sized business space and the smaller end of the middle market, so Huntington plans to bring its services and capabilities to those customers while $13 billion-asset Veritex offers Huntington the brand recognition and local expertise that can help bolster growth in the state, Wasserman said. Another area of opportunity is consumer, since 'neither of us are really going after the consumer business in Texas,' he said. 'We'll be launching our full consumer franchise into Texas. There's 31 branch locations that they've got, and I think, over time, you'll see us expand on that pretty significantly,' he said. That includes branch expansion, although Wasserman declined to provide specific details. Veritex is the 10th-largest commercial bank in Texas. With the deal – expected to close in the fourth quarter – Texas becomes Huntington's third-largest state in terms of deposits. The bank hasn't shared specific long-term goals in Texas, but Wasserman said he expects the state and the Dallas/Fort Worth metro area to be some of the largest for Huntington 'for a long time to come.' 'We will invest on top of that platform and really build it out even more than it is,' he said. That includes investments in talent, Wasserman indicated. Since Huntington has announced rollouts in Texas and the Carolinas and launched some specialty businesses, 'we have started to get quite a bit of inbound interest across the board in joining Huntington,' because 'bankers want to be part of a platform that's growing,' he said. Huntington has about 200 employees in Texas now; once the Veritex deal closes, that'll be about 1,000, he said. Wasserman declined to share any target for hiring or headcount expansion in the state, but said growth is part of the plan. To be sure, there's no shortage of competition across Texas, as national and larger regional banks, as well as local lenders, seek to expand on the backs of population and business growth in the state, through organic growth or merger and acquisition opportunities. Huntington aims to stand out with a local angle, Wasserman said. In commercial banking, 'that's actually a pretty differentiated approach,' he said. 'In many cases, what we're seeing is a lot of verticalization in the commercial banking space, where the relationships of local bankers are getting kind of disintermediated by industry experts within different institutions that are often not local.' Holland will remain with the company after the deal closes and become its Texas chairman 'to really help us make a smooth transition and to grow from the platform he and his team have already built,' Wasserman said. 'That's really key.' Veritex has 800 employees; when asked if all will remain, Wasserman said he expects the large majority will. 'Given the modest size of the deal, retaining relationship managers will be crucial,' JPMorgan analyst Andrew J. Dietrich said in a July 14 note. Huntington had about 400 people engaged in acquisition diligence, reviewing Veritex's commercial and industrial business and portfolio – 'not only the existing credit, but also just their philosophy,' Wasserman said. That was essential to ensure the bank's approach aligned with Huntington's, so the regional could be comfortable taking over Veritex's business and living with it for years, he added. The deal is expected to be modestly accretive to Huntington's earnings per share, result in minimal tangible book value dilution and has an earn-back period of about one year. Huntington expects to realize 25% cost synergies from Veritex's expense base, with half in the first year and the remainder in the second year, Dietrich noted. From here, Huntington remains largely focused on its organic growth strategy, rather than eyeing more M&A deals, although the bank remains 'opportunistic,' he said. 'We set a really high bar,' strategically, financially and culturally, with potential acquisitions, Wasserman said. 'It's not often that an opportunity clears those hurdles,' although 'if it did, you know, [we're] open to it.' Recommended Reading Huntington to buy Texas bank for $1.9B Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
‘Resist' deregulatory spree, Fed's Barr warns
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Federal Reserve Gov. Michael Barr called on policymakers Wednesday to 'resist the pressure' to loosen banking industry regulations or refrain from imposing rules on new activities during robust economic times. Pointing to periods in U.S. history when more lax regulatory environments led to crisis, Barr warned that 'weakening often appears justified at the time and may be implemented by well-meaning policymakers who simply miscalculate the long run effects of their actions.' Speaking at The Brookings Institution on Wednesday, Barr, a former vice chair for supervision at the central bank, said he's worried that's happening now, referencing some of his recent dissenting opinions on Fed proposals related to stress testing and the supervisory rating framework for big banks. With proposed changes to stress testing – an important innovation coming out of the global financial crisis – 'the board is responding to the current environment by agreeing to go through a process for the stress testing that I think is likely to ossify the stress test, make it easier for the banks to game those stress tests,' Barr said. 'People are doing this for good, well-meaning reasons, but I'm really worried that, over time, stress testing will become less effective.' Barr, who has been on the board since 2022, stepped down from the vice chair role in February. Michelle Bowman, appointed by the Trump administration, has since filled that position on the board and has moved swiftly to pursue changes to supervisory ratings, for example. On Wednesday, Barr highlighted the circumstances that led to the Great Depression, the savings and loan crisis of the 1980s and 1990s, and the global financial crisis, and lessons learned from each, calling those lessons 'one of the most important resources that policymakers have.' 'An important lesson we can draw from U.S. financial crises is the role that ill-advised weakening of the bank regulatory framework played in those crises,' Barr said. 'It is well within our ability, and is our duty as regulators, to learn from these episodes to avoid making the same mistakes.' Preceding those events, there was 'heady confidence that market discipline would control risk-taking, that downside risks were so implausible as not to merit attention, and that easing regulation was justified,' meaning 'insufficient thought was given to how regulatory weakening might create new vulnerabilities,' Barr said. 'A bit of humility would have helped,' he added. Although the industry is once again experiencing the political pendulum swing, shifts in regulatory philosophy across presidential administrations aren't unique, Barr acknowledged. 'Bank regulation involves trade-offs, and those trade-offs involve decisions about how much to worry about risk in the financial system, as compared to efficiency gains that you might have in the shorter term,' he said. 'That's appropriate for people to debate and to disagree about.' It's important to rethink regulation on a periodic basis, Barr said, 'not in one direction or another, not to say there's more regulation or less regulation, but do we have the right mix of regulation?' Memories are short, Barr said, recalling the March 2023 banking sector stress caused in part by a prior period of deregulation, when regulators reduced supervision of and requirements for regional banks. With the temporary Bank Term Funding Program, bank regulatory agencies stepped in to prevent that stress from becoming a financial panic, he said. 'The intervention worked, and it worked so well that nobody remembers that we had stress in the banking system just two years ago.' The lessons of history are 'here with us now,' he said. Looking ahead, you 'have to be humble about the ability to predict these shocks, and what you need to focus on is making the system less vulnerable when those shocks hit.' Barr, whose term as Fed governor ends in 2032, said he doesn't have any plans to leave prior to that. Recommended Reading Fed's Bowman urges more support of de novo banks Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 days ago
- Business
- Yahoo
Anthropic rolls out financial AI tools to target large clients
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Artificial intelligence startup Anthropic has rolled out Claude tools tailored for financial analysts to meet demand from enterprise clients, the company said Tuesday. While announcing the launch Tuesday in New York, Anthropic unveiled the latest features designed to answer queries for large financial workloads and integrate with financial data providers like Daloopa, Databricks, FactSet, Snowflake, PitchBook and S&P Global. Claude – Anthropic's AI assistant and a family of large language models – has been built to 'turbocharge' the work the analysts or fund managers are already doing that involves due diligence, market research, competitive benchmarking, financial modeling, investment memos and pitch decks, said Jonathan Pelosi, global head of industry for financial services at Anthropic. Claude's latest version for financial services that includes banks, insurance companies and hedge funds has a new feature that helps analysts build financial models directly in Microsoft Excel and generate downloadable Excel files with complete financial models. It also helps to create a PowerPoint deck. 'These are some of the ways we brought these features together to provide a one-stop shop to make life so much easier for these analysts to do meaningful work,' Pelosi told Banking Dive. With the advancement of AI, many financial institutions have launched AI assistants to help employees serve Wall Street clients. In January, Goldman Sachs introduced a generative AI assistant to its bankers, traders and asset managers. Anthropic's offering is geared toward helping financial analysts do their work more easily and efficiently, according to Pelosi. The AI startup's latest Claude version can pull data from multiple sources across platforms with links to source materials for cross-checking and deliver analysis in less than 30 minutes or even a few seconds, depending on the query, the firm said. That helps to save time and 'uncover insights' that can be missed, Nicholas Lin, a member of the product team, said at an Anthropic event Tuesday. Anthropic offers assistance during the implementation process to bridge the gap between theoretical capabilities and practical applications. However, Claude requires a 'human in the loop,' Pelosi pointed out, adding that the platform is not intended for autonomous financial decision-making or to provide stock recommendations that users follow blindly. 'When we onboard someone, we insist on training, understanding what the limitations are of these models, putting those guardrails in place so people treat it like it is a helpful technology, not a replacement for them,' he said. Claude aims to onboard more partners to quickly build out its ecosystem of financial data, Pelosi said. Anthropic has tailored solutions for individual financial institutions, customizing requirements based on the specific line of business's regulatory environment, Pelosi noted. The platform uses citations to provide visibility into information sources. For example, Claude supports uploading institution-specific documentation, like state-level insurance regulations or can be tailored to specific contexts like know your customer workflows. Claude provides customized solutions across compliance, research, and enterprise AI adoption through some leading consultancies, including Deloitte, KPMG, PwC, Slalom, TribeAI and Turing. However, the AI tool has certain limitations that Pelosi pointed out, such as its inability to generate videos or images and its intentional avoidance of consumer-focused capabilities. Some of Claude's existing clients include AIA Labs, Commonwealth Bank of Australia, American International Group, and Norges Bank Investment Management, Pelosi said. Co-founded in 2021 by Dario Amodei and Daniela Amodei, who previously worked at OpenAI, Anthropic said in March that it completed a fundraising deal that valued the company at $61.5 billion – up from roughly $16 billion around a year ago, The New York Times reported. In May, Anthropic launched Claude Opus 4 and Claude Sonnet 4 – two hybrid models – extending the features to its Claude Enterprise clients with enhanced coding and reasoning capabilities while responding more precisely to clients' queries. 'We are just getting started, and we are excited to see what people do with this new solution,' Pelosi said. 'This is just the beginning.' Recommended Reading Robinhood to launch banking product
