Federal Reserve Chairman Jerome Bowman: AI presents both opportunities and risks for the banking industry; the Fed urges strengthened systemic security.

On Tuesday, Michelle Bowman, Vice Chair for Banking Supervision at the Federal Reserve, warned of the dual impact of artificial intelligence on the banking industry, urging banks to strengthen system security while emphasizing the technology's significant practical value.

On September 29, Federal Reserve Vice Chairman Bowman said in prepared remarks for an event in Colorado that AI "is both a defense tool and an evolving risk," with enormous potential for both threat perpetrators and defenders.

Bowman had previously stated that the Federal Reserve should not "over-intervene" in banking operations on issues such as artificial intelligence, as U.S. officials are weighing the impact of this rapidly developing technology.

As previously reported by Bloomberg, regulators have suspended some cybersecurity-related bank inspections to give banks time to address security threats exposed by the latest AI models.

Specific protective measures: From basic network infrastructure to identity management

In his speech, Bauman outlined specific directions for banks to address AI-related cyber threats.

She stated that the starting point for defense efforts lies in solid basic network measures, including keeping asset inventories up-to-date, deploying multi-factor authentication to combat phishing, strengthening identity and access controls, and establishing robust vulnerability identification and patch management procedures.

These requirements point to the real challenges facing the banking industry in the AI era. As threat actors increasingly leverage AI to launch attacks, traditional passive defenses are no longer sufficient, and banks need to incorporate cybersecurity management into their proactive risk control framework.

Bowman also pointed out that while cybersecurity requires proactive involvement from bank boards and senior management, regulators recognize that the necessary preparations could pose a significant burden and challenge for community banks. She stated:

This is why we continuously adjust our IT inspection methods to take into account risk profiles and emerging threats and risks.

This statement aligns with her previous emphasis that the Federal Reserve should not impose "micromanagement" on banks regarding issues such as AI, reflecting the regulators' intention to implement differentiated regulation based on the size and risk characteristics of institutions, rather than adopting a one-size-fits-all mandatory requirement.

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