How banks can build a risk-intelligent approach to core modernization (www.techradar.com)

Banks are increasingly deploying AI technologies, yet many are neglecting the foundational architecture necessary for sustainable AI modernization. The UK Treasury Committee has raised concerns about the financial system's preparedness for AI-related risks, underscoring a governance issue: risk and compliance teams are typically involved too late in the design process, limiting their ability to influence critical architectural decisions. A proactive integration of risk teams in the early stages can foster a risk-conscious architecture, essential for managing the rapid pace of change and compliance demands, particularly under regulations like the EU AI Act. To navigate the complexities of AI adoption, banks must transition from legacy systems with outdated batch-processing capabilities to modern, cloud-native infrastructures. This evolution is crucial for real-time data integrity, traceability, and compliance with future regulatory requirements, such as enhanced traceability for high-risk AI systems. As cyber threats escalate and regulatory landscapes evolve, financial institutions face mounting pressure to build adaptable systems that preemptively mitigate risk, rather than retrofitting compliance after the fact. The call to action is clear: banks must prioritize risk-informed modernization strategies to avoid compounding liabilities in an increasingly AI-driven world.