PIMFA
What is Artificial Intelligence?
A recent Financial Conduct Authority (FCA) discussion paper, DP22/4: Artificial Intelligence, offered the following definition of Artificial Intelligence (AI):
‘It is generally accepted that AI is the simulation of human intelligence by machines, including the use of computer systems, which have the ability to perform tasks that demonstrate learning, decision-making, problem solving, and other tasks which previously required human intelligence. Machine learning is a sub-branch of AI.
AI, a branch of computer science, is complex and evolving in terms of its precise definition. It is broadly seen as part of a spectrum of computational and mathematical methodologies that include innovative data analytics and data modelling techniques.’
- WHAT DO FIRMS NEED TO CONSIDER?
Many PIMFA members are already using AI systems and tools in their everyday operations, and it is likely that the adoption of AI in financial services will increase rapidly over the next few years.
PIMFA firms already use AI tools for several purposes. For example, they analyse large volumes of data quickly, easily, and accurately, which enables their employees to spend more time working with and for their clients.
There are concerns that as AI becomes more advanced, it could introduce new risks, for example:
system develops biases in its decision making
leading firms to make bad decisions
rESULTING IN Poor outcomes for their clients
This is why it is essential that firms deploying AI systems have a suitably robust control framework around their AI components to keep a careful check on what they are doing.
As with any innovation, AI has the potential to make fundamental and far ranging improvements in how firms can serve their clients. However, we must ensure it is continually monitored and checked regularly to manage the risk and maximise the benefit.
- What are regulators doing?
A number of government departments are asking regulators such as the Financial Conduct Authority (FCA), Bank of England (BoE), Information Commissioners Office (ICO) and Competition and Markets Authority (CMA) to publish an update on their strategic approach to AI and the steps they are taking according to the White Paper. The Secretary of State is asking for this update by 30 April 2024.
On 13 March 2024, the EU Parliament approved the EU Artificial Intelligence Act. The EU AI Act sets out a comprehensive legal framework governing AI, establishing EU-wide rules on data quality, transparency, human oversight and accountability. It features some challenging requirements, has a broad extraterritorial effect and potentially huge fines for non-compliance.
Read this article from PIMFA journal #33 by Edward Russell at Solve about how talent and controls aid successful AI adoption.
Read this article from the PIMFA Journal #33 by Vicky Pearce at B-Compliant about how to use AI safely and compliantly.
Read this article from PIMFA journal #33 by Richard Doherty and Sumit Johri at Publicis Sapient about the traditional playbook built on manual processes, siloed business and technology functions, and relationship-driven models is no longer sufficient.
latest news
FCA Artificial Intelligence in UK Financial Services 2026 Survey
Jointly conducted by the FCA and the Bank of England (BoE), this survey aims to build a long-term picture of how AI and machine learning technologies, including foundation models and generative AI, are being developed and used across the UK financial services sector.
Building on previous surveys from 2019, 2022 and 2024, survey questions relate to AI systems and use cases deployed or planned for UK operations.
The UK’s Digital Standards Strategy (2026 to 2030)
The UK government has published its strategy for 2026-2030 outlining how the UK can leverage the economic potential of digital standards, focusing on technologies including AI, cybersecurity, quantum, advanced connectivity and semiconductors, as well as the internet.
The UK’s strategic objectives centre on:
- facilitation of responsible technology innovation, delivery of market benefit and economic value through standardisation,
- ensuring a coordinated, collaborative, and defined ecosystem,
- ensuring international digital standards are fit-for-purpose and meet national security and resilience needs as technology capabilities grow in sophistication, and
- a joined-up UK approach across industry, the tech community, and government.
FCA speech: Rethinking regulation for the age of AI
The FCA have published a speech by Nikhil Rathi, Chief Executive, FCA, where he outlined the FCA‘s evolving approach to regulating artificial intelligence in financial services, including reflections on what it means to be an effective regulator in an AI-driven environment.
The speech highlighted how system-wide powers may be used more actively, alongside changes to supervisory practices, intelligence gathering, collaboration, and innovation. It also referenced the FCA’s recent work on native tokenisation, signalling growing support for tokenised market structures.
AI: New Guidance and Resources from UK Authorities and Partners
The FCA’s Operational Resilience page has been updated with an extensive list of cyber and AI resilience guidance from UK authorities and industry partners.
Firms can access resources such as:
- A frontier AI risk mitigation webinar as well as guidance for firms to consider when strengthening cyber resilience from the Cross-Market Operational Resilience Group (CMORG)
- ‘Preparing for a vulnerability patch wave’ and ‘Why cyber defenders need to be ready for frontier AI’ publications from the NCSC, which outline how firms can effectively better understand evolving frontier AI capabilities and prepare against emerging threats.
- The NCSC’s ‘10 questions to ask when using AI models to find vulnerabilities’, which helps firms assess AI use in vulnerability management.
Read more on the FCA’s Operational Resilience page here.
The Financial Stability Board (FSB) consultation report on Sound Practices for Responsible Adoption of AI
The FSB has identified 12 sound practices for the responsible adoption of AI by financial institutions. Drawing on real-world implementation case studies, the practices are non-binding and are intended to support firms in governing AI responsibly across their organisations.
The practices span two broad areas: organisation-wide AI governance, covering board oversight, accountability and risk frameworks; and management of the AI lifecycle, covering data governance, model selection, monitoring and human oversight. The report acknowledges the benefits AI can bring, including improved efficiency, customer service and risk management, while also highlighting emerging risks around model complexity, cyber threats and financial stability.
The FSB is inviting feedback on the consultation report by 22 July 2026.
New PIMFA Podcast: Beyond the hype: what a real human-AI operating model looks like
On the latest PIMFA podcast, Richard Doherty, Publicis Sapient and Richard Preece, DA Resilience argue that bolting AI onto existing workflows isn’t transformation, it’s window dressing. The real work is redesigning how humans and machines share the work itself, repeatable, data-heavy tasks to AI; high-risk, trust-critical calls to humans; everything else human-in-the-loop.
Maria Fritzsche
Senior Policy Adviser - Operational Policy, Regulation and Innovation Lead
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