The Information's TITV
00:05:26 · Akash Pasricha, Aaron Holmes
[00:05:26] S0: And the other way that I'm thinking about it is, I mean, there are so many of these Neo Cloud companies now that have popped up. Isn't it quite easy conceivably for Microsoft to just say, Okay, well, if you can't do it, I'll find another Cloud company that can? I mean, is it as easy as that or is it a little more nuanced? [00:05:45] S1: I mean, that is the the approach that we've seen Microsoft take so far. They have, you know, deals with CoreWeave, Nebius, and scale, IREN, like, basically, all of the the major players in this sort of neo cloud space, which has been their approach just because they want capacity faster than they can build it themselves. But, you know, if that starts to shift and all of those smaller companies all are facing these issues of getting capacity online as quickly as possible. We might see, you know, Microsoft start to invest more in just trying to cram more, you know, capacity into the data centers that it already owns. So it... It'll be very interesting to see how that plays out in the coming years. [00:06:24] S0: And just remind us, Aaron, we saw the company reported earnings, I think it was last week, although the weeks are all blending together now. So, what kind of commentary did we hear about Microsoft being constrained by capacity here, and how important is that a story for them right now?
00:06:24 · Akash Pasricha, Aaron Holmes, Yueqi Yang
[00:06:24] S0: And just remind us, Aaron, we saw the company reported earnings, I think it was last week, although the weeks are all blending together now. So, what kind of commentary did we hear about Microsoft being constrained by capacity here, and how important is that a story for them right now? [00:06:44] S1: Yeah, the supply crunch very much continues. Microsoft says that they have more demand, for GPU rentals than they can meet from customers. And, of course, they also wanna set aside some of their GPUs to run their own, Copilot AI software and and use to train their own models. But, you know, there's kind of a flip side of that where if the entire market faces this demand crunch in a new environment post midterms, you know, potentially the the rental rate for GPUs is going to go up, which at least in the short term could actually kind of boost the revenue that Microsoft and and other cloud providers can extract from customers, especially big labs like OpenAI and Anthropic. [00:07:22] S0: Great. Well, Aaron, I wanna thank you for coming on. That is Aaron Holmes, our Microsoft reporter here at The Information. Big banks may not be thrilled about allowing AI agents just yet, given the risks that are involved with them, but my colleague Yueqi Yang has new reporting that smaller banks are embracing these tools. I want to bring on Yueqi to share more of her reporting. Welcome to the show, Yueqi. It's great to have you back. [00:07:48] S2: Hey, Akash. Thanks for having me.
00:07:48 · Yueqi Yang, Akash Pasricha
[00:07:48] S2: Hey, Akash. Thanks for having me. [00:07:50] S0: So, I want to start with the risks here. When you've been talking to your banking sources about these agents, I mean, on one hand, there's using agents in your own course of work, as an employee at a bank. On the other hand, there's customers using agents for some of their banking products. What are some of the risks here on both sides here that have been coming up in your conversations? [00:08:20] S2: So I think bankers are generally pretty concerned and cautious about people giving their logging and bank account information to their agents, especially as agents are becoming more popular, like Meta's Muse and Instinct are taking off very quickly and people wanted to use these agents to do shopping for them and potentially looking into their personal finances. And we've heard from the big banks saying that their policy is to block the agents. And that's because they're worried that agents might go rogue. And if your agent is misspending your money, then it's unclear who is going to be liable for that money. But at the same time, I've also talked to some of these more FinTech friendly banks, such as Lili Bank, Cross River Bank, Column, and they're actually going in the opposite direction. And for them, agents is just another extension of what they've provided before, which is to provide API access for banking use cases. And they're the early movers that are embracing agents to allow them to access bank accounts by consumers.
00:08:20 · Yueqi Yang, Akash Pasricha
[00:08:20] S2: So I think bankers are generally pretty concerned and cautious about people giving their logging and bank account information to their agents, especially as agents are becoming more popular, like Meta's Muse and Instinct are taking off very quickly and people wanted to use these agents to do shopping for them and potentially looking into their personal finances. And we've heard from the big banks saying that their policy is to block the agents. And that's because they're worried that agents might go rogue. And if your agent is misspending your money, then it's unclear who is going to be liable for that money. But at the same time, I've also talked to some of these more FinTech friendly banks, such as Lili Bank, Cross River Bank, Column, and they're actually going in the opposite direction. And for them, agents is just another extension of what they've provided before, which is to provide API access for banking use cases. And they're the early movers that are embracing agents to allow them to access bank accounts by consumers. [00:09:40] S0: So, we'll get to the smaller banks here in a second. But the big banks, I mean, have they said outright, we're not going to allow agents to access accounts or anything like that?
00:09:40 · Akash Pasricha, Yueqi Yang
[00:09:40] S0: So, we'll get to the smaller banks here in a second. But the big banks, I mean, have they said outright, we're not going to allow agents to access accounts or anything like that? [00:09:50] S2: Yes. So, JPM, Jamie Dimon specifically said during their earnings call recently that they're going to block all the third party agents. And for some of these other banks, Wells Fargo, Bank of America, for example, recently, they've changed their terms to say that if a customer is giving their login access to their agents, and then the agents get hold of their account, then the customers are responsible for any actions taken by the agents, presumably including agents misspending your money. So that's the initial steps that these major banks have taken to block or at least try to block external agents. [00:10:37] S0: Okay. Now, about the smaller banks, Lead Bank, Cross River Bank? What's their approach here?
00:10:37 · Akash Pasricha, Yueqi Yang
[00:10:37] S0: Okay. Now, about the smaller banks, Lead Bank, Cross River Bank? What's their approach here? [00:10:43] S2: So the smaller banks are working with FinTech providers to provide access to AI agents to use bank accounts or to use cards that are prepaid and with spending limits. So for example, Lead Bank works with Stripe and Stripe is one of the most important and dominant payment provider for a lot of popular AI agents, including Manus and Instinct. And Stripe is able to provide a single use virtual cards for agents with a spending limit so that they can go shopping for you. And these cards are issued by banking providers and Lead Bank is one of the providers. And some of these other banks, Column, for example, they work with a startup called Natural, which provides digital wallets for AI agents. And these wallets are essentially subledgered accounts under the name of the human users held at open at column. And that effectively means that the money held in the wallet for agents are actually FDIC insured money and account at the bank. [00:12:04] S0: So, if I'm hearing you correctly, I mean, it sounds like the smaller banks, they're not necessarily saying that the agents are not going to go rogue. They're just saying that if that happens, we're going to play in a much smaller sandbox of capital. Is that the idea?