Fintech
The Labour Government’s Impact on the UK FinTech Sector: Key Focus Areas
Is a better approach to AI needed?
For Dan McLoughlin of Lynx, despite much discussion about artificial intelligence and its applications to the financial services sector, the strategy to regulate it clearly and effectively is not yet clear.
He adds: “Many different topics and technologies are currently being lumped together under the AI banner. There is a world of difference between generative AI (Gen AI) technologies such as large language models (LLM), deepfakes and the kind of deep learning used to combat financial fraud. There is no one-size-fits-all solution, so policy clarification will be needed in the coming months.
“There was no mention in the Labour Party manifesto of interfering with existing or proposed regulations, so we can expect that the Payment Systems Regulator (PSR) regulations on Authorised Push Payment Fraud (APPF), due in October, will still come into force.
“This is critical, as this regulation is being closely watched by authorities around the world. It could be a catalyst for global convergence in fraud prevention and anti-money laundering, as well as highlighting the scale of the problem of money mules, which are funding organised crime around the world.”
Indeed, the industry will be closely watching the Labour Party’s moves as it gains traction in parliament, particularly its proposal for greater collaboration with the EU.
Dan concludes: “This could well lead to compliance with the EU’s Payment Services Directive 3 (PSD3), which becomes mandatory in UK regulation. Either way, UK fintechs would need to ensure they are compliant with this regulation if they intend to operate within the EU.”
On the other hand, Tiago Veiga, CEO of Aurum Solutions, argues that there is so much talk about the need to regulate artificial intelligence that it distracts from taking pragmatic steps to help make it safer.