The speed of the GenAI revolution is creating a regulatory vacuum. What’s the risk for banks?
Bankers like to know the rules even when venturing into innovative areas like GenAI. But competitive pressure is spurring many institutions to go fast without clear guardrails. When will the regulators catch up — and will chaos ensue when they do?
The pace of developments in generative artificial intelligence has put bank and credit union managements into a three-way squeeze.
On one side, they face the pressures of simple competitive reality. “You can’t afford to just marinate on the GenAI topic for a couple of years, to see what happens, because you will be so far behind by the time you begin that you might not be able to catch up,” says Lee Wetherington, senior director of corporate strategy at Jack Henry, in an interview with The Financial Brand.
If competitors act first, “you’ll find yourself in a deep competitive hole very quickly,” adds Wetherington.
On another side, banking leaders face the need to continually maximize their institution’s efficiency, which backers of GenAI promise the technology can deliver. Wetherington points out that if the promise is met, GenAI will reduce the need to hire as many employees to help banks continue to scale.
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