ECB Intensifies Scrutiny of European Banks' AI Exposure Amid Disruption Concerns

ECB Steps Up Scrutiny of European Banks' AI Industry Exposure

The ECB is exploring both the potential risks and benefits of AI for banks, including their dependence on technology companies and the potential for AI to transform the banking sector. The European Central Bank is delving into the risks faced by banks in the region from the artificial intelligence industry, amid heightened concern over hidden credit exposures and financial-sector disruption. The Frankfurt-based central bank is asking a small number of individual lenders for more details on their lending to areas including data centers, people familiar with the effort told Bloomberg. In parallel, the regulator is running targeted workshops to identify how banks are using generative AI. The people asked not to be named as the matter isn't public. An ECB spokesperson declined to comment. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg may send me offers and promotions. Plus Signed UpPlus Sign UpPlus Sign Up By submitting my information, I agree to the Privacy Policy and Terms of Service. Increased attention by the ECB to AI risks underlines how global regulators are aware of the potential for the technology to upend the banking sector, from transforming the business of investment advice to managing its historic need for financing. Banks and private credit firms globally have been pouring trillions of dollars into the AI build-out, which spans development companies to data centers and energy supply. The workshops focus on aspects such as business models, governance, and risk management. At least one lender understood the ECB's attention to signal the need for caution on lending to sectors including data centers, said one of the people. The project pre-dates the most recent bout of turbulence related to the AI build-out, last week's declines in stocks of money managers with exposure to private credit. The ECB said last year that the way banks use AI applications would be a priority for its bank supervisors for the three year period 2026-2028 and that it would run "workshops" on the topic. More broadly, the ECB and other authorities have expanded previous efforts to ask banks about their dependence on technology companies, other people familiar with the matter said. That includes questions about what they would do if a cloud service provider or data center was no longer available at short notice, said the people. Data recovery and back-ups are especially relevant here, they said. AI adoption will expose European lenders to even greater systemic threats from their reliance on foreign tech giants, the Netherlands' top financial regulator warned in an interview with Bloomberg last year. Yet the ECB is also asking about the potential benefits that such technology presents for individual banks, said one of the people. Another banker told Bloomberg that their firm is working on mapping its exposures to AI firms. That's complex because they have to consider not only loans to AI firms and data centers but also other links like those to their electricity suppliers, they said. This month stocks of firms offering wealth management services sold off as investors worried that large parts of the industry could be automated in the future. Other companies, including those in insurance and software, have seen their shares plummet this month due to speculation around the perceived threat AI poses.

European Central Bank Gauges Lenders' Risks From AI | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. The ECB is asking lenders for further details on their loans to areas such as data centers, Bloomberg News reported Monday (Feb. 23), citing sources familiar with the matter. At the same time, the ECB is holding workshops to see how banks are employing artificial intelligence, the report added. Bloomberg notes that these efforts highlight the way regulators are recognizing AI's potential to shake up the banking industry. Banks and private credit companies around the world have invested trillions into building out AI, whether that means development companies, data centers or energy supply, the report added. PYMNTS has contacted the ECB for comment but has not yet gotten a reply. The ECB workshops center on things like business models, governance, and risk management. A source told Bloomberg that at least one bank understood the ECB's wish to signal the need for caution when it comes to lending to sectors like data centers. These efforts are happening at a time when AI agents are becoming more deeply ingrained into compliance queues, cash management dashboards and payment routing engines. It's a shift that "marks the first real test of whether financial institutions trust AI with operational authority," PYMNTS wrote earlier this month. "Unlike earlier generative AI tools that responded to prompts, agentic systems can plan, reason and execute multistep workflows across systems with limited human intervention," the report said. "Financial institutions are embedding these systems into compliance, treasury, risk and payments infrastructure, signaling a shift from automation pilots to production-grade deployment." Agentic AI workflows are starting to reconfigure how regulated financial work gets done, especially in anti-money-laundering (AML) and know your customer (KYC) investigations, according to a recent Thomson Reuters analysis. Rather than analysts manually collecting data across sanctions lists, corporate registries and adverse media databases, AI agents can autonomously compile, reconcile and document findings while maintaining an audit trail fit for regulators. "It's a move from task automation to workflow orchestration, where AI coordinates across systems rather than assisting in isolated steps," according to the report. Last year, PYMNTS examined the rise of cognitive banking, which refers to the combination of AI-driven inferencing and pattern recognition and permissioned data (transactions, financial behaviors, linked accounts), letting banks shift from reactive servicing to proactive guidance. PYMNTS Intelligence research found that nearly three-quarters of surveyed bank customers wished for greater personalization, and that embedded conversational artificial intelligence could win back 72% of bank customers by offering that tailored experience.