Signal Study models systemic risk from AI vendor concentration in banking

Summary

A study finds that banks now rely on a small set of shared AI vendors across functions such as fraud screening, credit decisioning, anti-money-laundering triage, customer analytics, and internal decision-making. The paper models the contagion pathways that could unfold if one of those shared vendors were compromised, spreading risk across the wider banking system. It specifically traces a cyber-financial contagion scenario in which a breach at a single AI vendor cascades to multiple banks that share that vendor. The work reframes this exposure as a systemic risk to the whole financial system rather than an isolated operational problem for any one institution. It argues that vendor concentration itself should therefore be treated as a factor affecting financial stability.