Steven Maijoor: Painting like Rembrandt - managing risks in the age
of AI
Speech by Mr Steven Maijoor, Executive Director of Supervision of the Netherlands
Bank, at a Bloomberg event, Amsterdam, 16 September 2024.
* * *
Thank you, Peter, for your kind introduction and for the invitation. I understand that the
organisation of this event was looking for some entertainment. So they asked the
regulator to speak. I mean, what can go wrong?
So here I stand, very conscious of my role, in the most beautiful museum of the country.
In a few minutes you will enter the Gallery of Honour, the beating heart of the
Rijksmuseum, showing masterpieces by the greatest painters of the 17th century. With
one absolute focal point: the Night Watch.
As you may know, the Night Watch used to be bigger than it is now. Two hundred years
ago, they cut off pieces from the painting to make it fit in a particular room. These
pieces have never been found. A couple of years ago the museum's experts were able
to reconstruct the missing pieces on the basis of a 17th century copy. They did so with
the help of artificial intelligence. By comparing thousands of tiny pieces of the two
versions of the painting, the computers basically learned to paint like Rembrandt. You
should ask one of the experts here about it during your tour, it's an amazing story.
Digital innovation is literally everywhere. It has become part of everyday life, but its
possibilities are still far from exhausted. The financial industry is one of the sectors in
the economy that has embraced digitalisation to the full, especially here in the
Netherlands. Digitalisation has produced more efficient business processes, greater
transparency for consumers, and many new financial services, in particular in the area
of payments. For example, in the Netherlands, only two in ten purchases are still made
with cash. The other eight are done with digital means of payment.
At De Nederlandsche Bank, we welcome digitalisation in the financial sector. But we
obviously also consider the risks.
Take for example the outsourcing of digital services to large technology companies.
What if these companies are no longer able or willing to fulfil their obligations? Are
financial institutions fully aware of what these companies are doing with the data they
entrust to them? Another aspect is that many of these tech companies are not located
in Europe. With geopolitical tensions rising, there is a desire, particularly among some
European politicians, to develop certain critical technologies on European soil.
Tremendous effort has been put into developing European regulations to manage these
and other digitalisation-related risks. So that European citizens and businesses can
take full advantage of new technologies, safe in the knowledge that the risks are well
managed.
Large digital service providers, such as cloud providers, are set to become subject to
European oversight, for example. And supervision of crypto service providers is being
expanded. However, developments are happening rapidly, and the challenge is to be
able to reap the benefits of innovation while keeping out the bad stuff.
Of all innovations, generative artificial intelligence is undoubtedly the most exciting: with
the emergence of incredibly capable generative models and dramatic advances in
computing power, we might very well be on the verge of a new technological revolution.
Who knows soon we can all paint like Rembrandt.
Also here, we must make sure to maintain a healthy balance between harnessing the
benefits of innovation while mitigating the risks. When it comes to innovation, some
regions, like the US, have traditionally focused more on the opportunities side, with a
regulatory environment that's conducive to business innovation. We Europeans tend to
focus on the risks and call for regulation. But falling behind in adopting new innovations
is a significant risk too. So I would call for a balanced approach, and warn against
constraining AI-driven innovation too much
But that doesn't relieve us of the obligation to monitor the risks that come with it. Many
of the potential risks of AI may seem new, but if you look beneath the surface, they are
strikingly similar to traditional financial risks. Risks that we are familiar with. We already
have frameworks to assess concentration risk, third party dependence and
interconnectedness. This is good news. Of course, it's not a simple copy-paste
exercise. We may see new forms of interconnectedness in the financial system. For
example, autonomous trading agents may interact to create new dynamics in financial
markets. And technology that can be used to paint like Rembrandt also offers
possibilities for creative fraud, from phishing to identity theft. So the nature of the risks
may not be different, but the crooks are getting better. That means we are entering a
new phase of the never-ending race between risk and risk management.
But we are entering this race from a relatively good starting point. AI is not a new
discipline - various use cases have been around for quite some time now. And as I
pointed out, many of the risks involved are risks we're already familiar with. They're just
wearing new disguises. So although this is no reason for complacency, we can take
comfort in the fact that we're not starting from scratch.
In short, to use a fitting metaphor, I see the glass as half full. And I'm confident that we'll
be able to put digital innovation to good use while keeping its darker sides in check.
On that rather cheerful note, let me stop here and wish you a pleasant evening and a
wonderful tour of the paintings.