The rapid adoption of artificial intelligence is reshaping financial services, with fraud and cyber risk emerging as the most immediate challenge. According to David Crawford, chief strategy and transformation officer at Pay.UK, criminals are leveraging AI faster than institutions can respond.
“Fraud and cyber risk are moving fastest and are among the most immediate challenges facing the sector,” Crawford stated in response to questions about the Financial Conduct Authority’s (FCA) Mills Review. The review highlighted four key ways AI will transform retail financial services, including operations, consumer journeys, market competition, and fraud.
While AI offers benefits like enhanced fraud detection through pattern recognition, it also empowers criminals with tools for more convincing scams, synthetic identities, and automated attacks. This creates a “double-edged sword” scenario where the technology used to combat fraud simultaneously enables new attack vectors.
To address this challenge, Crawford emphasized the need for payment infrastructure that prioritizes safety and resilience across the entire ecosystem. Key measures include:
- Shared fraud intelligence: Facilitating information sharing between institutions
- Stronger data governance: Establishing clear standards for data usage and security
- Real-time monitoring: Implementing systems to detect suspicious activity as it occurs
Pay.UK’s Enhanced Data Exchange, which builds on Confirmation of Payee tools by sharing additional account information like tenure and age, serves as an example of this approach.
Looking ahead, Crawford anticipates a shift from simple transaction processing towards “intelligent networks” that provide real-time visibility while maintaining consumer trust. He noted that next-generation infrastructure should enable innovation without creating unmanaged risk, pairing modern rails with adaptable governance and stronger data capabilities.