Articles - Using AI and technology to deliver FCA strategic priorities

 Today marks international joke day. Now, as a parent, I have access to any number of dad – or bad – jokes at any one time. I won’t regale you with them now – who’s heard of a regulator with a sense of humour anyway. One thing I and my team never crack jokes about is AI and its potential to transform financial services.

 We’re at a key point in the adoption of AI and dramatic technological change.

 Strategy 2025–30
 We have put innovation at the very heart of our 5-year strategy. It's mentioned on all 19 pages. Yes, I checked.

 I don’t need to tell you that here in the UK we excel at financial services. We lead the world in commercial insurance, debt issuance and foreign exchange trading. As an American, I have a naturally optimistic nature. But sometimes in the UK, you wouldn’t realise that we’re home to the world’s second largest fintech sector.

 We mustn’t be afraid to shout loud and proud what we can offer. Only last month, Nvidia CEO, Jensen Huang described the UK as a ‘Goldilocks’ zone for AI – a balance of research excellence, investment capital and talent. At the FCA, we are determined to do that.

 We’re out there talking to the rest of the world about what we can offer – our new director for Asia-Pacific started her role today. We know that we can do even more to support fintechs who want to scale up, and we expect to be saying more about that later this year.

 Our innovation story
 Industry and innovators, entrepreneurs and explorers want a practical, pro-growth and proportionate regulatory environment. We already have a global reputation as a leader in regulatory innovation. In 2014, we launched Project Innovate, which included the world's first Regulatory Sandbox. Our first cohort opened in 2016, where 69 applications with 24 firms were accepted, of which 18 firms went on to test.

 Since then we’ve received over 2000 applications and gone on to support close to 200 firms in the Regulatory Sandbox. And we are always open, always ready to help. Firms will begin testing in our newest ‘supercharged’ Sandbox in October and we’re thrilled to be collaborating with Nvidia this time. The new Supercharged Sandbox will provide firms with greater computing capabilities, enhanced data sets and more advanced tools. It demonstrates our commitment to helping firms safely experiment with AI.

 We’ve been thrilled with the reaction to this latest Sandbox which is open to applications until 11 August 2025. It’s a bit early to go into all the details of the applications we’ve received for the Supercharged Sandbox, but I'd like to share a glimpse of the kinds of use cases we’re seeing. Firms are coming to us with ideas on topics like financial inclusion, financial wellbeing, and financial crime and fraud.

 So, if you’re a financial services firm looking to innovate and experiment with AI, get in touch with the team. You can scan the QR code to access our participation pack. I’ll touch properly on AI Live Testing shortly, but our 2 new services complement each other perfectly.

 The Sandbox will allow a technical focus on developing proof of concept with access to data. Whereas Live Testing is for firms on the next step of the pathway – who have their proof of concept but need regulatory comfort and market deployment testing. We know from our joint surveys with the Bank of England that 75% of firms have already adopted some form of AI. But most are using it internally rather than in ways that could benefit customers and markets.

 We understand from our own experience of tech adoption that it’s often internal processes that are easier to develop. We’re testing large language models to analyse text and deliver efficiencies in our authorisations and supervisory processes. Combined with our expert people, we want to respond, make decisions and raise concerns faster, without compromising quality. However, we have also rolled AI out in ways that speak directly to customers.

 In our supervision hub we are using predictive AI to help our supervisors with real-time knowledge. AI voice bots now direct consumers to the right regulatory agency like the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) using conversational AI. So, we have experience.

 AI Lab
 We want to give firms the confidence to invest in AI in a way that drives growth and delivers positive outcomes for consumers and markets. Our AI Lab – launched in October 2024 – is helping with this. Like any good testing environment, the Lab, is made up of a number of components. We’ve used an AI sprint to bring people together to shape our regulatory thinking.

 The Input Zone allows stakeholders to share insights about the most transformative AI use cases, while the Spotlight showcases real-world applications from innovators across the sector. And we’re throwing AI Live Testing into the mix. Applications for AI Live Testing will go live next week. I am very much looking forward to working with firms from September.

 Feedback’s a gift
 As you may know, we’ve recently been engaging with industry about the shape our new AI Live Testing will take. Seeking views on how we can help firms deploy safe and responsible AI that will benefit UK consumers and markets. There’s real deep interest in this area – we’ve had exactly 70 responses to our paper.

 It’s too early yet for me to give you a detailed run down of the feedback we’ve received, but let me give you a sneak peek at some of the key themes emerging. We’ve seen strong support for the initiative! Firms see the plans as a valuable opportunity to support innovation across a range of use cases and firm types.

 There is also a desire for access to synthetic data, shared tools and AI evaluation techniques to help encourage experimentation. As an aside, our synthetic data expert group is about to publish its second report offering industry-led insight into navigating the use of synthetic data. But back to Live Testing, firms have told us collaboration and transparency will be key to success: they want to learn both from us, and from each other. That means sharing best practice and sector-specific insights.

 One theme worth touching on is the question around regulatory uncertainty. Some respondents expressed concerns about potentially ambiguous governance frameworks stopping firms from innovating with AI. We have been clear that we believe our existing frameworks, such as the Senior Managers Regime and the Consumer Duty, give us oversight of AI in financial services and mean we don’t need new rules.

 This in fact gives us a competitive advantage. Avoiding new regulation allows us to remain nimble and responsive as technology and markets change. You’ve seen our policymaking processes – how could we possibly write rules that keep up with the speed that AI is changing? I’ve talked about using AI in ways that benefit customers and markets. But where technology creates opportunity, it can also create the opportunity for abuse.

 But if you are concerned about the AI you want to develop – come and talk to us.  We have a long history of working with innovative firms – and that’s no joke.

 Conclusion
 I want to thank you again for the opportunity to speak here today. I’m truly excited at the idea of what AI can deliver – for us as a regulator, for consumers, for markets and for the UK as a whole. I hope it’s been clear from the speech today, we are tech positive and open for business. We want to hear your ideas, your successes, even your failures. Because we will only help the responsible adoption of AI if we share inspiration and ideas. We want the UK to be a global hub for AI adoption and by working together we can achieve that.