Trust is “crucial” in the adoption of AI by financial services to ensure both protection and growth, Financial Conduct Authority head of innovation services, Colin Payne, has argued.

Speaking about the FCA’s AI Sprint event, which discussed the use of AI in financial services and was hosted in January this year, Payne emphasised the importance of cultivating trust.

“I’m not saying to completely trust what the computer says, this is still very new technology,” he explained.

“But this is about demonstrating that we as a sector can embrace AI safely and responsibly to address those challenges and deliver on massive potential”.

He added with trust firms will be able to get senior buy-in to experiment, and consumers will engage with AI-driven services.

“Trust in AI is like trying to build a house from the roof down — you need solid foundations first,” he continued.

“Neither the FCA nor firms can establish this trust alone, but together we can create the environment needed for AI to flourish”.

Payne said the sprint event revealed firms are not looking for more regulation and are, instead, looking for clarity on the authority’s already existing rules.

“They’re eager to innovate but need to understand how current frameworks apply to AI,” he said.

“We are of one mind on this, as our chief executive Nikhil Rathi explained in his letter to the prime minister, we want to use our existing outcomes-based frameworks as much as possible.

“We’re not looking to create new regulations, we want to make the ones we already have work for this burgeoning sector.

But Payne acknowledged the future challenges faced by the industry as a result of AI differs from his expectations.

While he was aware of some of the considerations that would have to be taken into account to integrate AI into the industry, one thing he had not considered was “unknown unknowns”.

“What happens when AI makes impersonation scams more sophisticated? How do we ensure AI data centres are sustainable? These are the questions keeping practitioners up at night,” he said.

The future
Payne added this represents “just the beginning” for AI Sprint as the authority is working through all the feedback it has received during the event.
He said the FCA will be considering how it can best enhance trust, clarify its rules, and prepare for “unknown unknowns”.

The FCA is also taking steps to support safe, growth-focused innovation, including expanding its AI Lab and Supercharged Sandbox to accelerate innovation, and working with Synthetic Data Expert Group to enable safe testing of new ideas.

The authority will also be holding a roundtable with the ICO in May to discuss with industry leaders about the challenges and opportunities they face in respect of AI adoption and wider innovation.