New on FinoLib · Volume I: Global Economy
My latest article is now live on FinoLib, the free finance library I write: AI in Financial Services, Jobs and the Semiconductor Crisis, from Volume I: Global Economy. Read the summary below for the substance of the topic, then continue to FinoLib for the complete treatment.
7.4 The Semiconductor Geopolitical Crisis
The idea in plain words
Advanced AI chips have become a geopolitical weapon. Leading-edge chipmaking is concentrated in Taiwan, and US export controls limit China’s access, though DeepSeek’s efficiency raised doubts about how far chip controls can cap capability.
Key points
■Taiwan held 92% of capacity below 10 nanometers in a 2021 SIA–BCG study, and ASML is the only maker of EUV lithography machines.
■The chain runs from AI models to advanced GPUs to advanced manufacturing almost entirely in Taiwan, so any conflict over Taiwan’s status would disrupt chip supply for every company and government.
A closer look
The AI boom has elevated semiconductors — specifically advanced AI chips — to the status of a geopolitical weapon. The chain of logic is direct: AI models require large clusters of advanced GPUs → those GPUs require advanced semiconductor manufacturing → advanced manufacturing is almost entirely concentrated in Taiwan → Taiwan’s political status is one of the most acute geopolitical flashpoints on Earth. This chain of dependencies makes the semiconductor supply chain the most strategically sensitive industrial supply chain in the world today.
7.5 AI Transforming Financial Services — In Depth
The idea in plain words
Finance is an information business, so AI reaches it early: pattern-finding in trading, fuzzy matching and break prioritization in reconciliation, credit scoring, real-time fraud scoring and RegTech for KYC, AML and surveillance.
Key points
■Algorithmic trading has existed since the 1970s, and high-frequency trading, executing thousands of trades per second, has dominated equity trading volumes since the 2000s.
■Visa reports 329 billion transactions in the year to September 2025, about 900 million a day, each scored by models in milliseconds before approval.
A closer look
Financial services is the industry most directly and immediately affected by AI — because it is fundamentally an information-processing industry, and information processing is what AI excels at. The transformation is happening across every function of banking, capital markets, insurance, and asset management, at a pace faster than most other sectors.
Recap
Finance is an information business, so AI reaches it early: pattern-finding in trading, fuzzy matching and break prioritization in reconciliation, alternative-data credit scoring, real-time fraud scoring at card networks that handle about 900 million Visa transactions a day, and RegTech for KYC, AML and surveillance.
7.6 AI and Labor Markets — Jobs, Displacement, and New Roles
The idea in plain words
AI automates tasks more than whole jobs, and the most exposed tasks are the routine ones that fill many junior finance roles. The best early evidence is narrow.
Key points
■In a study of 5,179 customer-support agents, a generative AI assistant raised issues resolved per hour by 14% on average and by 34% for novice and low-skilled workers.
■That suggests AI can spread the know-how of the best workers to beginners, but turning it into an economy-wide number takes assumptions.
A closer look
The most socially consequential question about AI is its impact on employment. The economic literature is divided, reflecting real uncertainty about the pace and nature of the transition. Historical precedent offers both comfort and concern: previous waves of automation — agricultural mechanization, industrial robots, personal computing — ultimately created more jobs than they destroyed, but the transition was painful and uneven. The jobs created were often different jobs in different places, and displaced workers did not automatically become the workers rehired. The AI transition may be faster and broader than previous waves, potentially compressing transition timescales that previously played out over decades.
7.7 AI Regulation — How Governments Are Responding
The idea in plain words
The EU regulates AI by risk level and treats credit scoring as high-risk. The US favors light federal rules, the UK runs an AI Security Institute, and India relies on principles-based guidelines.
Key points
■Many financial AI applications, including credit scoring, life and health insurance pricing and automated employment screening, are high-risk under the EU AI Act, and firms serving EU customers must comply wherever they are headquartered.
■High-risk obligations include mandatory human oversight, transparency to affected individuals, data governance and regular bias testing.
A closer look
The EU AI Act deserves specific attention for finance professionals. Because many financial AI applications are classified as high-risk — including credit scoring systems, life and health insurance pricing, and automated employment screening — companies offering AI-powered financial services to EU customers must comply with the Act regardless of where they are headquartered. Compliance requirements include: mandatory human oversight of high-risk AI decisions, transparency obligations (affected individuals must be informed that AI was used), data governance requirements, and regular bias testing. Breaching the high-risk obligations can cost up to €15 million or 3% of worldwide annual turnover, whichever is higher; the 7% ceiling is reserved for banned practices.
What the full article covers
In the full article I take you through these sections:
■7.4 The Semiconductor Geopolitical Crisis
■7.5 AI Transforming Financial Services — In Depth
■7.6 AI and Labor Markets — Jobs, Displacement, and New Roles
■7.7 AI Regulation — How Governments Are Responding
It includes a recap, a reveal-on-click quiz and the official sources behind every figure.
Volume I: Global Economy
Read the full article on FinoLib
The complete article, AI in Financial Services, Jobs and the Semiconductor Crisis, with every worked example, diagram, quiz and source, is free to read in Volume I, Global Economy on finolib.com.
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