The warning came as the UK Prime Minister Rishi Sunak is seeking to make the UK a centre for the regulation of AI. Rathi said, “Cyber fraud, cyber-attacks and identity fraud [are] increasing in scale, sophistication and effectiveness” as AI becomes more widespread.

This will pose significant concerns for financial firms in particular. The head of FCA warned senior managers at those firms that they will be “ultimately accountable for the activities of the firm”, including decisions taken by AI.

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“As AI is further adopted, the investment in fraud prevention and operational and cyber resilience will have to accelerate simultaneously”, Rathi noted. “We will take a robust line on this – full support for beneficial innovation alongside proportionate protections.”

Fighting AI fraud

The AI fraud detection sector has been making strides in the banking sector for years, with RBI reporting several institutions – such as FICO – implementing AI in their services as far back as 2018.

The AI market is set to expand significantly in the following years. According to GlobalData’s “Thematic Intelligence: Artificial Intelligence” report, investments in AI will hit $909bn by 2030 – up from $81bn in 2022. This marks a CAGR of 35% forecasted between 2022 and 2030.

As far as cybersecurity revenues are concerned, GlobalData analysts expect them to reach $344bn worldwide by 2030.

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Derek Mackenzie, CEO at Investigo, a global skills provider, said: “With AI set to have a seismic impact on the financial services industry, tackling the digital skills shortfall should be a top priority.

“From compliance to coding, businesses operating in this area are crying out for the latest tech talent to help them explore and implement AI into the workplace, yet many remain woefully understaffed”, Mackenzie added. “The FCA is right to get ahead of the game on this important issue, but without the right talent pipeline in place, far too many firms will find themselves falling behind in terms of AI capabilities and open to risk due to a lack of in-house regulatory expertise.”