Agentic AI race by British banks raises new risks for regulator

Core Insights - The adoption of agentic AI by banks poses new risks for retail customers, prompting the UK's financial watchdog to ensure customer interests are prioritized [1][3][4] - Agentic AI is seen as a significant opportunity for companies, capable of planning, decision-making, and adapting based on goals, unlike generative AI [2] - The Financial Conduct Authority (FCA) anticipates that consumer-facing applications of agentic AI will begin to emerge in early 2024, highlighting the associated risks due to the speed and autonomy of AI actions [3] Industry Developments - Major UK banks such as NatWest, Lloyds, and Starling are collaborating with the FCA to prepare for trials of agentic AI for retail customers, marking a shift from traditional back-office applications [2][6] - Research firm Gartner predicts that by the end of 2026, 40% of financial services firms will implement AI agents, although over 40% of agentic AI projects may be discontinued by the end of 2027 due to rising costs and unclear business value [5] - British banks are leading in the trial of AI agents for customer-facing tasks, supported by the FCA's AI sandbox and live testing initiatives, while the EU's AI Act creates uncertainty regarding the treatment of agentic AI in finance [6] Regulatory Framework - The FCA plans to enforce rules such as the senior managers regime and consumer duty to hold executives accountable for any misconduct and to ensure that customer interests are prioritized [4]