Fed Vice Chair Bowman Urges Banks to Shore Up Defenses Against AI Risks

Federal Reserve Vice Chair for Supervision Michelle Bowman said in prepared remarks on Sept. 29 that artificial intelligence is "both a defensive tool and an evolving risk" for the banking industry, with significant potential for both attackers and defenders.

Bowman urged banks to start with strong foundational cybersecurity measures, including keeping asset inventories updated, deploying phishing-resistant multi-factor authentication, strengthening identity and access controls, and establishing robust vulnerability identification and patch management programs. She noted that as threat actors increasingly use AI in attacks, traditional reactive defenses are no longer sufficient, and banks should integrate cybersecurity into proactive risk management.

She also said regulators recognize that these preparations can be a significant burden for community banks, which is why the Federal Reserve continues to adjust its IT examination approach to account for risk profiles and emerging threats. The approach reflects a preference for differentiated supervision based on institution size and risk characteristics rather than a one-size-fits-all mandate. Bowman has previously said the Fed should not "over-manage" banking on issues like AI. Bloomberg has reported that regulators paused some cybersecurity-related bank examinations to give banks time to address threats exposed by the latest AI models.