UK banks to test AI in 'supercharged sandbox'

AI will be used to tackle fraud and market abuse

The FCA has given banks the okay to test artificial intelligence, as part of a push to encourage more risk-taking in the UK financial sector.

The UK's top financial regulator has unveiled a new initiative that will allow banks and financial firms to experiment with Nvidia’s AI technologies, as part of a government-backed push to energise innovation and drive economic growth.

The Financial Conduct Authority (FCA) has announced the launch of a "supercharged sandbox" – a secure, supervised testing environment in which approved financial services firms will be able to explore new AI applications using Nvidia's high-performance accelerated computing products.

The programme testing is slated to start in October.

It comes nearly a year after Chancellor Rachel Reeves told the FCA to encourage more risk-taking in the UK's financial sector to improve competitiveness and attract greater investment.

"This collaboration will help those that want to test AI ideas but who lack the capabilities to do so," said Jessica Rusu, the FCA's Chief Data, Intelligence and Information Officer.

"We'll help firms harness AI to benefit our markets and consumers, while supporting economic growth."

Although the FCA has not prescribed specific use cases, industry insiders have floated several potential applications. These include using AI to detect and prevent authorised push payment fraud – a growing crime in which victims are tricked into transferring funds to fraudsters – and spotting stock market manipulation through advanced data analysis.

The move aligns with the government's broader effort to position the UK as a global leader in AI.

Prime Minister Keir Starmer has previously advocated for widespread AI adoption, including the creation of "sector champions" to guide implementation in key industries.

However, concerns remain that unchecked deployment could lead to job losses, including in financial services, unless carefully regulated.

Jochen Papenbrock, Nvidia's Head of Financial Technology for EMEA, welcomed the partnership, calling the sandbox a "secure environment to explore AI innovations using Nvidia's full-stack accelerated computing platform."

"AI is fundamentally reshaping the financial sector by automating processes, enhancing data analysis and improving decision-making, which leads to greater efficiency, accuracy and risk management across a wide range of financial activities," Papenbrock said.

Nvidia, whose chips and platforms power a large share of the AI tools used in both research and industry, has been central to the AI boom. The company's market capitalisation has surged past $3 trillion, making it one of the most valuable companies in the world.

Commenting on the new initiative, Sumant Kumar, CTO Banking & Financial Markets at NTT DATA UK&I, said: "In a sandbox, every action leaves a mark. This supercharged sandbox may help banks get to a viable AI proof-of-concept faster, but it doesn't reduce their regulatory obligations. If anything, it adds new layers of responsibility. As soon as a firm begins developing models in the sandbox, it needs to be ready to explain how they work, why they produce certain outcomes, and how they've been built."

He added, "In financial services, the main bottleneck is often about ensuring the right governance is in place. The FCA will still expect clear documentation and strong controls around data provenance and auditability – even in a controlled environment.”