Does AI Sovereignty Matter?
Dr. Brian Massey
Managing Partner at Anordea | Strategy Advisor, Professor & Keynote Speaker | Helping CXOs Drive Faster AI Transformations across Banking and Financial Services.
Hello and welcome to the latest edition of Banking On AI Strategy. In this edition we’ll review some recent industry developments in AI, and consider how AI Sovereignty matters to the FS leaders of today.
AI Industry Updates:
Infrastructure: Broadcom Positions VMware For AI Sovereignty
Broadcom CEO Hock Tan is positioning VMware, acquired for $69 billion in 2023, as a sovereign alternativeto Big Tech cloud services, particularly in Europe, where data sovereignty and stringent regulations are a priority. Despite backlash over VMware’s shift from upfront licensing to annual subscriptions—drawing criticism from trade groups and lawsuits from customers like AT&T—Tan argues the changes simplify VMware’s offerings and enhance value by reducing reliance on public clouds and improving control over AI-driven data centers. Broadcom, whose roots are in semiconductors, is leveraging its AI chip business alongside software acquisitions like VMware, CA, and Symantec, as it eyes further deals globally, beyond the U.S. market.
The financial services sector, heavily reliant on secure, scalable, and compliant technology infrastructure, faces significant implications from Broadcom’s pivot toward AI sovereignty. Banks must balance the convenience of public cloud services with the growing need for control over data, particularly as AI adoption accelerates. VMware’s focus on localized, resilient infrastructure offers an alternative for financial institutions seeking to meet stringent data privacy regulations, such as GDPR, while maintaining control over sensitive customer and transaction data. For banking leaders, this underscores the importance of evaluating sovereignty in AI strategy—ensuring data remains secure, compliant, and within their operational control. It also presents an opportunity to invest in in-house capabilities or strategic partnerships with providers like VMware, reducing dependence on Big Tech and aligning with broader trends in data localization and regulatory compliance.
Policy: Trump Rescinds Biden’s Executive Order On AI
Shortly after returning to the White House, President Donald Trump repealed former President Joe Biden’s AI guardrails, signaling a shift toward fewer restrictions and greater collaboration with the tech industry. While Biden’s executive order focused on oversight, transparency, and addressing ethical concerns in AI development, Trump’s approach emphasizes accelerating innovation and reducing regulatory hurdles. This move, welcomed by some Silicon Valley leaders, aims to prioritize economic growth and competitiveness, though critics warn it may weaken safeguards for privacy, civil liberties, and safety. Despite ideological differences, elements of Biden’s policies, such as the AI Safety Institute and recent actions to expand AI infrastructure, remain intact, as Trump pivots toward initiatives like the $500 billion Stargate project to build AI data centers and energy infrastructure.
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For the financial services sector, Trump’s repeal of AI guardrails could have significant implications, particularly in balancing innovation with risk management. With fewer regulatory constraints, banks may have more freedom to develop and deploy advanced AI tools, potentially accelerating advancements in fraud detection, personalized banking, and operational efficiency. However, the removal of safeguards raises concerns about privacy, bias, and accountability—critical issues for a sector that handles sensitive customer data and operates under strict compliance frameworks. Banking leaders must carefully navigate this new landscape by adopting internal governance frameworks to ensure ethical AI use and by exploring sovereign AI solutions to retain control over proprietary data and algorithms. As geopolitical competition in AI intensifies, institutions will need to weigh the benefits of regulatory flexibility against the risks of diminished oversight and potential public mistrust.
Policy: US Stargate Plan To Build AI Infrastructure
SoftBank, OpenAI, and Oracle have announced a $100 billion joint venture, dubbed “Stargate,” unveiled alongside President Donald Trump, to expand AI infrastructure with plans to scale the investment to $500 billion. The initiative, aimed at establishing the U.S. as a global AI leader, focuses on constructing data centers and energy capacity to support AI development, with the first projects underway in Texas. Positioned as a significant step toward AI innovation, the venture emphasizes data sovereignty, particularly in light of rising global demand for localized data solutions. While the project has received substantial backing, including from Middle Eastern investors and technology giants like Microsoft and Nvidia, it raises questions about funding sustainability and geopolitical implications in the race to dominate AI infrastructure.
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For the financial services sector, this massive investment in AI infrastructure underscores the importance of data sovereignty and secure technology ecosystems. As AI increasingly drives innovation in areas such as risk management, fraud detection, and personalized customer experiences, banks must critically assess how and where their data is stored and processed. The Stargate initiative highlights a shift toward localized, sovereign data solutions, which could help financial institutions comply with stringent regulations like GDPR while maintaining control over proprietary data used in AI models. Banking leaders should evaluate partnerships with infrastructure providers like Oracle and SoftBank to balance scalability with data protection. Furthermore, they must consider the long-term implications of relying on global AI ecosystems, ensuring their AI strategies align with emerging regulatory frameworks and geopolitical dynamics to safeguard operational resilience and competitive advantage.
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Does AI Sovereignty Matter?
If you have been following the events and conversations at Davos recently you will have noticed the topic of AI Sovereignty cropping up more than once. The concept of AI Sovereignty has gained significant traction in recent months, with the WEF itself leading this discussion last year. For governments and corporations alike, AI sovereignty represents the ability to maintain control over the development, deployment, and data governing artificial intelligence systems. For the financial services sector, understanding and acting on AI sovereignty is both a challenge and an opportunity.
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