What happened
UK banks have deployed AI for real-time fraud detection, specifically against Authorised Push Payment scams, and for automating lending checks and personalising financial offerings. Mastercard expanded its AI-powered insights, providing banks with transaction risk scores derived from multiple data points to pre-empt fraudulent fund transfers. Conversational and agentic AI are now handling customer queries and supporting agents. The FCA is testing AI in sandboxes for stock market manipulation detection. This adoption, by 75% of firms with 10% more planning, targets operational efficiency, productivity, and cost reduction.
Why it matters
The widespread adoption of AI introduces new operational dependencies on external AI models and their data inputs, potentially creating a visibility gap for internal risk and compliance teams regarding decision-making logic. Mastercard's expanded AI insights, while providing risk scores, may reduce the transparency of underlying fraud detection mechanisms, increasing exposure to less explicit control over transaction validation. This raises due diligence requirements for IT security, fraud operations, and compliance teams to understand and validate AI system outputs and their impact on regulatory adherence.
