Banks racing to adopt artificial intelligence could end up dangerously dependent on a small handful of Silicon Valley firms, according to a new analysis from rating agency Moody's.

The "Bank of the Future" report, published in late July, argues that AI will eventually cut costs and boost revenue across Wall Street and the City of London — but not without significant risk. Moody's says most financial institutions now rely on a relatively small group of foundation-model and cloud-computing providers, creating what it calls a "systemic dependency."

A single outage at a major provider, the report warns, could ripple across customers and entire sectors at the same time — a risk regulators are likely to scrutinize more closely as adoption deepens. More than three-quarters of UK financial firms already use AI in some form, according to a January report from a UK Treasury select committee, with insurers and international banks leading adoption for tasks such as claims processing and credit assessment.

Moody's also flags vendor-dependency risk: the pricing power held by a few key AI and infrastructure providers could squeeze the banking industry. The report notes this is likely to become increasingly difficult as unprofitable generative-AI vendors such as OpenAI and Anthropic face growing pressure from investors to turn a profit. Banks, however, retain some leverage through proprietary data, technology negotiation experience and open-source models.

The analysis assigns a 20% probability that AI will be capable of performing the work of a "solid mid-level employee" by 2030. Lloyds Banking Group chief executive Charlie Nunn has already committed to a £13bn AI-driven strategy involving £2bn in cost cuts, telling reporters the changes would affect jobs even as the bank continues hiring and reskilling staff. Moody's separately warned that AI could make it easier for customers to shift deposits toward higher-yielding accounts at short notice, putting pressure on banks to maintain depositor trust and funding stability.

Sources