The London Stock Exchange Group (LSEG) announced yesterday that it is collaborating with Microsoft to build tailored generative AI models for banks and other financial institutions, according to reporting by the Financial Times. This strategic partnership reflects the growing appetite within the finance industry to leverage AI, while keeping proprietary data secure.
According to LSEG CEO David Schwimmer, the company is having discussions with customers about combining their private data with LSEG's vast data assets to create customized natural language models. Microsoft, which took a 4% stake in LSEG last December, is supporting these efforts through its prowess in AI research and development.
Major banks have expressed interest in developing proprietary AI models trained on their confidential information. As Schwimmer explained, financial institutions want the benefits of generative AI without exposing sensitive data to external platforms like ChatGPT. With LSEG's data resources and Microsoft's tech capabilities, clients can build AI uniquely suited for use cases like trading strategies and risk management.
While details of participating institutions remain undisclosed, this initiative highlights AI's appeal in financial services. It also underscores regulatory concerns around data privacy as AI adoption accelerates. LSEG appears well-positioned to capitalize on this trend, potentially adding AI solutions to its offerings alongside market data.
However, the company's latest earnings report was mixed. Despite a slight increase in operating profit, LSEG saw slower growth in data subscriptions. Its equities division also took a hit, with an 11% revenue decline attributed to low IPO activity in London.
Nonetheless, LSEG's collaboration with Microsoft reinforces its efforts to revitalize the UK's capital markets post-Brexit. The partners' development of tailored AI models aims to make financial institutions more competitive through data-driven insights. Though details remain scarce, the deal signifies the finance sector's growing embrace of AI and its nuanced approach to leveraging the technology.