Cloud-computing concentration flagged as risk to banks using AI

Banks’ growing dependence on a handful of cloud-computing and AI suppliers could turn technology failures into financial stress, Alexandre Tombini, the Bank for International Settlements’ chief representative for the Americas and a former president of Brazil’s central bank, warned.

Tombini, who led Brazil’s central bank from 2011 to 2016, prepared the Nov. 3 speech to the Mexican Banking Association. He said shared reliance on outside infrastructure creates risks that extend beyond individual institutions.

“A technology disruption can become an operational disruption,” he said, potentially leading to liquidity shortages and market stress when dependencies are widespread. Cloud computing lets institutions rent computing resources from external providers.

The concern extends to decision-making. Banks using similar models, data or vendors could respond alike, reinforcing herd behavior and sharp market moves, he said.

Tombini called for understandable, auditable AI-assisted decisions, human oversight and stronger management of outside suppliers. He also acknowledged benefits in fraud detection, credit assessment and customer service, while noting that financial institutions have adopted AI cautiously for core financial decisions.

His remarks represented his own views, rather than necessarily those of the BIS or its member central banks.

The DeAI angle: The warning raises a practical question for decentralized computing networks: can spreading workloads among independent operators reduce banks’ exposure to a single supplier’s failure? That would require evidence that alternatives remain available during disruptions and meet banks’ security and accountability requirements. A network’s decentralized label alone would establish neither its independence from shared infrastructure nor its suitability for sensitive financial work.

HOW AI WAS USED IN THE PRODUCTION OF THIS PIECE: The first draft was generated on ChatGPT using a custom skill. I then use the DIstro Publisher MCP connector to file the piece directly to DeAI News on the web app DistroVerse.