Banks Using AI for Competition and Protection

In a recent Financial Times special report, journalist Chris Newlands examines how global banks are racing to harness AI for both competitive advantage and fraud prevention, even as criminals exploit the same technology at an accelerating pace.

HSBC's appointment of its first Chief AI Officer, David Rice, signals the seriousness with which major institutions are approaching the technology. CEO Georges Elhedery has been explicit that AI plays a key role in building a bank designed for the future. Yet the same technology is fuelling a surge in criminal activity. Industry body Cifas recorded 444,000 fraud reports in 2024, a record high, with identity fraud in banking alone rising 10% year-on-year to 63,678 cases.

Experts warn of a growing “innovation asymmetry.” Banks must operate within regulatory and ethical frameworks, while criminals leverage AI without constraint. Generative AI now allows fraudsters to replicate customer voices, identities, and behaviors with alarming precision, rendering legacy security systems increasingly ineffective.

“To close the gap, security leaders at banks must pivot from reactive defence to predictive intelligence,” Shanker Ramamurthy, Global Managing Partner for Banking and Financial markets at IBM, told the FT. “The goal is not just to catch fraud faster, it is to build a resilient ecosystem that anticipates the threat and disrupts attack paths before malicious transactions can be initiated.”