Bank of England Governor Andrew Bailey said financial regulators should adopt artificial intelligence to better detect misconduct and risks within firms they oversee. Speaking at the London School of Economics on Monday, Bailey stressed the need to invest heavily in data, data science, and AI techniques to make full use of the vast information regulators already collect.
Bailey warned that supervisors face a recurring problem: crucial evidence of wrongdoing may exist within their own datasets but remain undetected until it is too late. “It also creates the danger for the authorities that you’ve got the evidence in the building and you haven’t been able to use it and it subsequently comes out that somewhere in your system was the smoking gun,” he said.
The BoE governor reiterated his opposition to rolling back financial rules in the name of business competitiveness. He said easing oversight could risk a return to the kind of behavior that destabilized the economy during the 2008 financial crisis.
His comments come amid ongoing debate over how much regulation is appropriate for the UK’s financial sector. In July, Bailey pushed back against Finance Minister Rachel Reeves’ claim that regulation was a “boot on the neck of businesses,” defending the BoE’s prudential framework for banks and other institutions.
The BoE is now exploring how AI might strengthen its supervisory role, potentially helping regulators spot early-warning signs of fraud, mismanagement, or systemic vulnerabilities hidden in mountains of financial data.