Barclays has been inducted into the second group of firms handpicked by the City watchdog for its live artificial intelligence pilot program, as Britain’s banking giant doubles down on the technology race to overhaul financial services.
The FTSE 100 lender will negotiate with high street rival Lloyds Banking Group, which is entering the system through subsidiary Scottish Widows, as well as credit reference agency Experian, payments outfit GoCardless and Swiss bank UBS.
Run by the Financial Conduct Authority in collaboration with Advai, a British specialist in automated testing, testing and validation of AI systems, this initiative offers successful applicants a safe harbor of control where they can put their models through their paces. The aim is to allow firms to remove governance effectively before those systems are unleashed on major consumer decisions.
Speaking at the Innovate Finance Global Fintech Summit, Jessica Rusu, chief data, information and intelligence officer at the FCA, said the program “demonstrates our commitment to supporting the pace of change in AI, while demonstrating how regulators and industry can work together to implement innovation responsibly”.
The announcement comes at a time when Britain’s traditional lenders are under intense pressure to demonstrate technical credentials that can stand up to the tech-native neobanks that have been nipping at their heels. Investors have grown impatient with the persuasive story of AI, especially one that imposes tangible cost and headcount implications.
Analysts at UBS warned earlier this year that banks will be “hard pressed” to present a “coherent financial case for AI implementation: what is being used now and what it means for the future state of overall costs and headcount in particular”.
The urgency is evident in the formation of alliances in recent months. Barclays has thrown its lot in with Microsoft AI in a deal that will put AI tools in the hands of around 100,000 of its banks, while NatWest has signed up with OpenAI and HSBC has turned to French giant Mistral. NatWest, Lloyds and HSBC each sit in the top 20 of the Evident AI index, a global measure of AI adoption in banking.
Yet for all the enthusiasm, the dangers were not apparent. US regulators have recently summoned top Wall Street officials to an emergency meeting amid concerns that Anthropic’s recently released “Mythos” tool could pose a threat to the financial system, a reminder that the cybersecurity implications of highly sophisticated models continue to worry executives on both sides of the Atlantic.
FCA launched its first live AI testing group last December, with Monzo, NatWest and Santander among the first participants. For small and medium-sized companies on the sidelines, the growing system provides a useful climate in which the regulator will draw the lines as AI embeds itself deeper into British finance.
