The EU AI Act, which was enforced earlier this year, is a significant step in regulating AI technology within the EU with the aim of establishing the region as a leading hub for trustworthy AI while mitigating risks associated with its implementation. Although the Act will impact various industries, its influence on the financial services sector may initially appear minimal. However, banks are seeking greater clarity on new regulations to enhance customer protection amidst a fast-evolving regulatory landscape.

Banks are facing challenges in combating sophisticated fraud tactics such as AI-generated fraud and deepfakes, with billions lost to fraud globally. There is a need for banks to invest in innovative technology to enhance fraud detection and customer protection, balancing customer experience, compliance, and fraud prevention.

Furthermore, financial institutions are confronted with the decision of whether to build or buy advanced fraud prevention tools to meet regulatory compliance requirements and enhance cybersecurity. Collaboration with technology vendors and establishing multi-layered fraud detection mechanisms are crucial in protecting customers from evolving fraudulent attacks.

Viewing regulatory compliance as a strategic opportunity, banks must align with current and future regulatory standards, working together to establish an identity intelligence ecosystem to share fraud threats and enhance overall security. Embracing regulatory requirements as a commercial opportunity, institutions can develop scalable compliance programs that adapt to future changes, ensuring a more secure financial environment for customers.