The Human in the Loop AI is transforming banking, open finance is taking shape, and businesses are demanding better payments. But who remains in control? AI is helping Lloyds investigate fraud, the Bank of England reveals how extensively financial institutions are adopting intelligent technology, and the FCA is exploring the infrastructure behind open finance. Meanwhile, new research points to growing business interest in Pay by Bank, and Funding Circle is blurring the boundaries between cards, credit and bank transfers. Five stories from the world of UK payments and banking, with one question running through them: as technology takes on more responsibility, who remains accountable? 1. Lloyds reports 90% accuracy from AI-assisted fraud investigations Lloyds Banking Group has published results from its agentic AI platform supporting debit-card fraud investigations. The technology has assisted specialists with more than 10,600 live customer cases over 90 days. Lloyds reports decision accuracy exceeding 90%, a 30% reduction in staff overriding AI recommendations, and roughly half as many systems needed during customer calls. Crucially, trained fraud specialists retain responsibility for the final decisions. Why it matters: This is evidence of AI moving beyond demonstrations into operational banking. However, the performance figures are Lloyds’ own, rather than independently verified results. Source: Lloyds announcement, 26 October. Lloyds Banking Group 2. Bank of England reveals how extensively financial firms are using AI A new survey from the Bank of England and Financial Conduct Authority provides a revealing picture of AI adoption across British financial services. Of 196 responding firms, 86% reported using AI, compared with 75% in the 2024 survey, although differences in respondents and methodology mean the figures are not directly comparable. Among firms completing the detailed questionnaire, 80% reported having AI agents deployed. Yet only 2% reported agents operating with broad autonomy. There is another striking finding: the three largest cloud and computing providers accounted for 79% of reported relationships. Why it matters: Financial institutions are adopting AI rapidly, but autonomy remains tightly constrained. Meanwhile, dependence on a small number of technology providers creates important questions about operational resilience. Source: Bank of England and FCA AI survey, 26 October. Bank of England 3. FCA prepares to test the infrastructure behind open finance The FCA is preparing to test different infrastructure models for open finance, according to comments by Simone Plances, manager of its Smart Data Accelerator, reported by Open Banking Expo. The regulator intends to explore centralised, decentralised and hybrid approaches, examining which responsibilities should sit with common infrastructure and which should remain with individual organisations. It is also considering how AI agents might access and use financial information on behalf of customers. Why it matters: The UK is beginning to confront the infrastructure and governance questions that must be resolved before open finance can operate at scale. This is planned experimentation, not an agreed architecture or operational service. Source: Open Banking Expo, 26 October. Open Banking Expo 4. NatWest research finds 94% of businesses willing to trial Open Banking payments New research commissioned by Payit by NatWest suggests that businesses are becoming increasingly receptive to open banking payments. According to the findings, 47% of surveyed businesses already use open banking, while 94% say they are likely to trial it as a payment method over the next 12 months. But there is a warning beneath the enthusiasm: 93% consider bank-equivalent regulatory oversight important, while 59% say their existing payment processes result in late payments. These are survey responses, not independently verified adoption or transaction figures. Why it matters: The opportunity for Pay by Bank appears substantial, but willingness to experiment is not the same as sustained adoption. Trust, reliability and integration remain critical. Source: Payit by NatWest research, 26 October. Open Banking Expo 5. Funding Circle connects card credit to bank transfers Funding Circle has introduced a feature allowing customers to make transfers to UK bank accounts directly from its Cashback card. The service is designed for expenses that cannot normally be paid by card, including rent and supplier invoices. Funding Circle says customers can access up to 42 days of interest-free credit, with transfers made in the business’s own name. Transfers requested before 2pm on working days are eligible for same-day payment. Why it matters: This is an interesting example of the boundaries between card payments, bank transfers and business lending becoming less distinct. The proposition is not simply another payment method. It combines access to credit with the ability to pay suppliers through bank transfers. Source: Funding Circle announcement, 27 October. Funding Circle Holdings plc (LSE: FCH) This Substack is reader-supported. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit northeypoint.substack.com/subscribe
