AI to “transform financial services by 2030”

The Financial Conduct Authority (FCA) has published a landmark review into impact of AI on retail financial services which concludes the technology is set to become a defining force in improving access, personalisation and efficiency, but warns of increased risks around fraud, cyber security and customer harm.  

Led by FCA executive director Sheldon Mills and commissioned by the Board, The Mills Review is the first work of its kind initiated by a regulator globally.

It identifies for major AI‑driven shifts likely to impact retail financial services: the transformation of firm operations; the evolution of consumer journeys; the reshaping of competition and market power; and the amplification of fraud and cyber risks.

The report finds there is already consumer appetite for the use of agentic AI in personal finance, with research commissioned by the FCA showing that a fifth of people – equivalent to 11 million UK adults – are likely to use AI that can act autonomously within pre-set goals. However, consumers in the survey are concerned about trust and control of AI.

FCA executive director Sheldon Mills said: “AI will transform financial services by 2030. It creates significant opportunities for consumers, firms and the wider economy.

“This report sets out a roadmap for how industry regulators and government can prepare for the next phase of AI-driven change in our world-leading financial services sector.”

Key recommendations

The Mills Review outlines seven recommendations for the FCA Board and Executive to consider:

Secure and adapt the regulatory perimeter.
Strengthen system-wide coordination and oversight.
Monitor the transition to autonomous models and adapt regulatory frameworks.
Scale up the FCA’s AI Lab to support AI models and system innovation in financial services.
Enable the foundations for agentic finance.
Build and adopt an AI-enabled agentic supervisory model.
Develop a trusted public-interest AI-enabled financial capability service.

Ashley Alder, Chair of the FCA, said: “As is clear in the report, we need to keep pace with a rapidly changing environment and the principles-based, outcomes focussed approach we’ve taken on AI – relying on the Consumer Duty and Senior Managers Regime – has been critical to us doing so. The recommendations build on work the FCA has been doing – not least allowing firms to test their use of AI with us – and our own use of AI to be a smarter regulator, more efficient and effective.”

Shanika Amarasekara, the Finance & Leasing Association (FLA) Chief Executive said: “AI is reshaping consumer finance faster than many people realise.

“It’s changing how people search, compare and make financial decisions, and the Mills Review rightly recognises that we are moving towards a world where financial support is more personalised, continuous and, in some cases, delegated.

“For lenders and finance providers, the prize is enormous. AI can make borrowing simpler, improve fraud detection, identify financial difficulties earlier and deliver better outcomes for customers. But innovation will only succeed if people trust it. Customers need to understand when AI is being used, have confidence that decisions are fair and transparent, and remain in control.

“Getting the next phase right matters far beyond financial services. FLA members provide £163 billion of new lending every year, financing the real economy by helping millions of consumers make essential purchases and enabling businesses across the UK to invest, grow and create jobs. Responsible adoption of AI can make that finance faster, more efficient and more accessible.

“The challenge now is to strike the right balance. Firms need a policy environment that gives them the confidence to innovate and invest responsibly, while ensuring consumers remain protected. Policymakers should also consider the growing influence of AI tools operating outside the regulated financial sector. As more people turn to AI to help make financial decisions, the rules must evolve to ensure trust, fair competition and innovation continue to work hand in hand.”

The FCA has said it will launch an AI good and poor practice publication later this year, and has been having discussions directly with firms to find out what is working well, where firms are facing challenges, and where further clarity would help. Find out more on how the FCA is engaging with firms to help shape its approach to AI.