Four of the world's largest financial institutions have pooled resources to create a unified AI governance framework for banking, signaling that Wall Street is taking control of its own AI safety standards rather than waiting for government mandates. The Fintech Open Source Foundation (FINOS) announced the establishment of the FINOS AI Fund on June 23, with founding members The Depository Trust and Clearing Corporation (DTCC), Morgan Stanley, Royal Bank of Canada (RBC), and NatWest committing to collectively invest in open source AI projects and governance standards tailored to regulated financial services.

The move reflects a growing tension in AI governance: traditional regulatory processes move slowly, while AI technology evolves at breakneck speed. Financial institutions, which operate under strict regulatory oversight and manage mission-critical systems like trading and settlement, face particular pressure to adopt AI responsibly without falling behind competitors. By creating their own governance framework, these banks are essentially writing the rulebook themselves, positioning the financial services industry as a lead architect of how AI should be governed in regulated environments.

Why Is Wall Street Creating Its Own AI Standards?

The financial services industry operates differently from consumer tech companies. Banks don't just deploy AI for customer recommendations or content moderation; they use it for settlement, clearing, and trading, where errors can cascade across the entire financial system. This interconnectedness creates a unique governance challenge that horizontal AI regulations may not address.

The FINOS AI Fund tackles this by focusing on what the industry calls "agentic AI," which refers to AI systems that can take autonomous actions within defined boundaries. Unlike a chatbot that responds to user queries, an agentic AI system might autonomously execute trades, flag suspicious transactions, or manage settlement workflows. These systems require longer "human-in-the-loop" oversight, greater transparency, and tighter regulatory alignment than general-purpose AI applications.

"The FINOS AI Fund is about moving from exploration to measurable outcomes. As open source continues to reshape technology stacks, the Fund and its Governing Board are uniquely positioned to look across the industry to identify where effort should be focused in order to deliver the strongest ROI for the industry across agentic AI, controls, training and certification, and shared utilities," said Gabriele Columbro, Executive Director of FINOS.

Gabriele Columbro, Executive Director of FINOS

What Specific Governance Tools Are They Building?

Rather than creating abstract principles, the FINOS AI Fund is developing concrete, machine-readable governance tools that banks can actually implement at scale. The initiative focuses on six key areas that address the real operational challenges financial institutions face when deploying AI systems.

• Upstreaming Financial-Grade Requirements: Embedding financial services requirements for governance, security, observability, and control into widely adopted open source AI projects and standards through participation in Linux Foundation initiatives.
• Regulatory and Industry Alignment: Engaging regulators, industry bodies, and ecosystem stakeholders to translate emerging policy expectations into practical, open, and technically implementable approaches for regulated AI adoption.
• Governance-as-Code Enablement: Advancing the FINOS AI Governance Framework (AIGF), CALM, and Common Cloud Controls (CCC) as complementary open building blocks for machine-readable controls, reference architectures, and runtime oversight in regulated AI environments.
• FSI-Led Specifications and Conformance: Developing common specifications, reference implementations, and conformance approaches to support interoperable, production-ready intra- and inter-firm agentic AI workflows across firms, vendors, and platforms.
• Certification and Market Readiness: Supporting assessment and certification approaches that help validate open source projects, standards, products, implementations, protocols, and formats for enterprise financial services use.
• Skills and Community Activation: Expanding AIGF training, certification, and community participation to strengthen industry readiness and cross-sector collaboration around AI governance and implementation.

The FINOS AI Governance Framework (AIGF) is already in use at major institutions. Morgan Stanley, one of the founding members, actively leverages AIGF in new vendor onboarding and encourages other AI, risk, and engineering leaders across the industry to adopt the same approach.

"As AI becomes embedded into mission-critical workflows, we need a shared baseline for how governance is understood and applied. At Morgan Stanley we actively leverage the FINOS AI Governance Framework in new vendor onboarding and we encourage AI, risk, and engineering leaders across the industry to take a similar approach so teams can operationalize AIGF consistently across organizations and suppliers," said Madhu Coimbatore, Managing Director, Head of Firmwide AI Platform at Morgan Stanley.

Madhu Coimbatore, Managing Director, Head of Firmwide AI Platform, Morgan Stanley

How Can Financial Institutions Participate in This Initiative?

The FINOS AI Fund operates as a member-led Supplemental Directed Fund (SDF), meaning participating institutions pool resources to solve shared industry problems. Rather than each bank building its own governance infrastructure in isolation, they collectively fund a dedicated team of subject matter experts and developers to deliver structured, outcomes-oriented results. The Fund is steered by a member-led Governing Board of senior leaders responsible for strategic funding allocation and project prioritization.

Financial institutions, technology providers, regulators, standards bodies, and open source communities interested in collaborating on financial services requirements for responsible AI adoption can learn more at ai.finos.org. FINOS members interested in influencing the priorities and work of the FINOS AI Fund are invited to join at ai.finos.org/ai-fund.

The outputs from this initiative are developed as open source under neutral FINOS governance, meaning the standards and tools created are transparent and auditable. This approach allows the entire financial services industry to benefit from the work, not just the founding members.

"The AIGF is made by FSIs, for FSIs. By aligning the industry around practical standards that can be implemented at scale, we can help make agentic AI adoption more responsible and grounded in the realities of regulated financial services," said Johnna Powell, Managing Director and Head of Technology, Research and Innovation at DTCC.

Johnna Powell, Managing Director and Head of Technology, Research and Innovation, DTCC

What Does This Mean for AI Governance Broadly?

The FINOS AI Fund represents a significant shift in how regulated industries approach AI governance. Rather than waiting for government mandates or relying on voluntary corporate commitments, financial institutions are collectively building the technical infrastructure needed to govern AI responsibly. This industry-led approach has several advantages: it reflects the specific operational realities of financial services, it moves faster than traditional regulatory processes, and it creates a unified standard that reduces fragmentation across firms.

The initiative also signals to regulators and standards bodies that the financial services industry is serious about responsible AI adoption. By demonstrating concrete governance mechanisms and shared standards, banks strengthen their position in policy discussions and help shape regulatory expectations around AI in finance.

"Open source is fundamental to how financial services innovates and by actively participating in its development, we help shape not just the foundations we depend on today, but the innovations we'll all rely on tomorrow. As agentic AI moves from pilot to production, the decisions the industry makes now will determine how safely and sustainably it scales. It takes this kind of collective effort to turn responsible AI from a pledge into a practice," said Bhupesh Vora, Europe Head of Capital Markets Quantitative and Technology Services at RBC.

Bhupesh Vora, Europe Head of Capital Markets Quantitative and Technology Services, RBC

The FINOS AI Fund demonstrates that governance doesn't have to be imposed from the top down. When an industry faces a shared challenge, pooling resources and expertise can produce practical, implementable solutions faster than waiting for external regulation. As AI becomes more embedded in financial systems, this collaborative approach may serve as a model for other regulated industries facing similar governance challenges.