Barclays has been included in the second cohort of firms selected by the city regulator for its live artificial intelligence testing program as the British banking institution steps up the technology race to reshape financial services.
The FTSE 100 lender will work with its main rival Lloyds Banking Group, which is taking part in the program through its subsidiary Scottish Widows, along with credit reference agency Experian, payments provider GoCardless and Swiss banking giant UBS.
The initiative is being run by the Financial Conduct Authority in collaboration with Advai, the UK specialist in automated testing, assessment and assurance of AI systems, and will provide successful applicants with a regulatory safe haven in which to put their models through their paces. The intent is to allow companies to iron out governance wrinkles long before these systems are released for high-risk decisions that affect consumers.
Jessica Rusu, FCA’s chief data, information and intelligence officer, told Innovate Finance’s Global Fintech Summit that the program “reflects our commitment to supporting the pace of change in AI, while demonstrating how regulators and industry can work together to harness innovation responsibly.”
The announcement comes at a time when the UK’s traditional lenders are under acute pressure to demonstrate technical credentials that can stand up to comparison with the tech-enabled neobanks hot on their heels. Investors are becoming increasingly impatient for a compelling AI narrative, especially one that lays out concrete impacts on costs and headcount.
UBS analysts warned earlier this year that banks would be “under intense pressure” to formulate a “coherent financial story for AI implementation: what is being spent now and what does that mean for the future trajectory of spending overall and headcount in particular.”
The urgency is reflected in the flurry of alliances struck in recent months. Barclays has teamed up with Microsoft AI in a deal that will put AI tools in the hands of around 100,000 of its bankers, while NatWest has signed with OpenAI and HSBC has turned to French champion Mistral. NatWest, Lloyds and HSBC each rank in the top 20 of the Evident AI Index, the global benchmark for AI adoption in banking.
But despite all the enthusiasm, the risks have not gone unnoticed. American regulators recently called Wall Street chief executives into an emergency meeting amid concerns that Anthropic’s newly released “myth” tool could pose systemic risks to the financial system. This is a reminder that the impact of increasingly powerful models on cybersecurity remains a major concern for regulators on both sides of the Atlantic.
The FCA launched its first live AI testing cohort last December, with Monzo, NatWest and Santander among its first participants. For small and medium-sized businesses watching from the sidelines, the expanding program offers a useful indication of where the regulator will draw the line as AI penetrates ever deeper into British finance.
