Swarms of agents in a financial house of cards
Stripe and Open AI have announced an open source platform for agentic shopping and payments. This will spawn a myriad of agents that can buy anything you need and everything you don't. With a global financial system that is already a house of cards, what could possibly go wrong?
In the seemingly endless drumbeat of new AI announcements, last week Open AI
announced their first agentic shopping feature, Instant Checkout. This received a fairly lukewarm reception in some quarters due to the limited number of initial partners (unsurprisingly not including Amazon who had previously blocked Google's shopping agent on their site. I'm sure this is just the first of many steps into eCommerce by Open AI, but perhaps more significantly, in partnership with Stripe, they announced an open platform for agentic shopping. This Fortune article summarises the potentially profound implications for the structure of eCommerce.
A whole new eco system of shopping assistants using this platform will doubtless substantially benefit the de facto payments processor, Stripe. At the same time, start ups like Hobson, and users in general, should welcome Stripe’s weight and resources behind this open source initiative as we feel our way towards trusting AI agents with our credit/debit cards.
How badly might this go wrong?
- Will early adopters struggle with uncompleted transactions, or maybe have to return incorrect purchases? Almost certainly?
- Will we hear horror stories of early adopters’ bank accounts being drained by hallucinating wine shopping agents buying entire cases of Chateau Lafite 1982? Possibly, but evolving best practice around payment limits and explicit transaction approvals should minimise the risk. Responsible user behaviour feels key. Norms for when and when not to trust our shopping agents seem relatively intuitive. If you wouldn’t trust your favourite teenage child with unfettered access to your credit card, then probably unwise to trust a shopping agent that is not even in kindergarten yet.
- Will a global swarm of shopping agents bring the world’s banking system to its knees? Almost certainly not. Swarms of agents co-operating to disseminate information about new offers amongst like minded buyers, and agents working 24x7 to snap up offers the minute they pop up will doubtless cause demand spikes crashing eCommerce websites, but this seems fairly unlikely to crash major financial infrastructure.
More generally though,is there systemic risk in massive scale deployment of co-operating, ‘always on’, financial agents with instant access to global news?
Disclaimer: I am not an economist or an expert on global financial markets, but here’s a thought experiment which I’d love someone to convincingly refute. Bank runs are an inherent risk in our financial infrastructure that hit the headlines every few years. Banks fundamentally rely on their depositors confidence that their money is safe. Collapse of that confidence leads remarkably swiftly to collapse of the entire bank unless governments intervene. Collapse of a bank can lose their customers their life savings so it is unsurprising that any whiff of a bank collapse causes panic. Large scale panic withdrawals of funds makes the bank’s collapse a foregone conclusion.
Historical friction in the retail banking system gave governments time to intervene such as in the 1973 run on smaller banks in the UK. The only way most people could withdraw funds was by queuing in line at their local branch. Banks were only open 6 hours a day, 5 days a week and each branch only had limited amounts of cash to dispense on any particular day. News of the crisis emerged over several weeks through newspapers and word of mouth.
In contrast, the collapse of Silicon Valley Bank UK played out in a few hours. At midday on Friday 10 March 2023 SVB UK insisted it was independent from the US entity which had collapsed the previous day. But the majority of SVB UK’s customers were sophisticated and highly connected tech companies/investors, sharing information with US colleagues through Twitter feeds, chat rooms, Whatsapp groups, discords, slack, email and word of mouth. An overwhelming volume of online withdrawals on Friday afternoon and other concerns lead the Bank of England to immediately close SVB UK before the end of the day.
After an intense weekend of political lobbying and government pressure, by 7am Monday morning, HSBC had bought SVB UK for £1. All deposits at SVB were guaranteed, Thousands of tech sector jobs were saved and wider infection of the UK economy was forestalled.
Despite regulatory constraints and government backstops, the structural cause of bank runs persists and as SVB illustrates, the crash can now happen in minutes not weeks.
With this background, it might be useful to have a personal financial AI agent that constantly monitors news channels and takes executive action to move funds from one bank account to another as soon as there is any sign of an issue. Of course all our agents would share their actions on financial agent Slack channels/Whatsapp groups, and by the time the bank CEO gets back from his coffee break both his phones will be ringing, his PA will be frantic and the regulator will be hammering on his door.
On a more positive financial tech note, albeit not an AI powered one, Apple Pay has consistently been one of the most joyously accessible experiences I have ever had. I just need the merchant to guide me towards the payment terminal and I can dispose of all my savings just as effortlessly as everyone else. But not quite always…last week after supplementing my low cost Easy Jet flight with the right to take a bag with me, the right to board the plane and the right to sit down, I went the whole hog, opting to spend my remaining holiday funds on a gin and tonic. Here’s the conversation that ensued.
“Gin an tonic please.”
“certainly – just hold your phone against the screen.”
“Unfortunately being blind I cannot see the screen.”
“No worries, Sir, it’s just by my finger.”
More seriously, technology based payment collection is quite fragile. Airlines, train refreshment trolleys, and increasingly vending machines, parking ticket machines and other purchasing experiences no longer offer the option to pay cash. This obviously saves time and money for the vendor, but when the payment terminal, the internet connection or the power supply fail then no-one gets to drink coffee, buy a snack or park their car.
Some say that we should all have a stash of cash as insurance against systemic technology failing. My scepticism about carrying cash is that it doesn’t help if the rest of society don’t recognise cash. Maybe the better approach is to hoard something that can always be bartered. In that vein, An ex-colleague of mine is convinced that the entire artifice of fiat banking faces imminent collapse and has gold bullion buried in his garden (seriously), but that’s another debate. After all, gold is only useful as a means of exchange or store of value if we all agree how much an ounce of the yellow, shiny stuff is worth.