UK banks are scaling back their exposure to artificial intelligence as concerns grow over a potential downturn in the sector. This shift comes amid heightened scrutiny from the Bank of England, which has been closely monitoring lenders' AI risks. Katharine Braddick, the new head of the Prudential Regulation Authority, shared these insights in her first interview since assuming the role in July. She noted that while the BOE’s reviews have not indicated that banks would worsen any AI shock, the central bank remains vigilant.
Braddick emphasized that the BOE’s extensive examinations of banks’ AI ties have not uncovered evidence that lenders would act as amplifiers of a sector-wide correction. However, she cautioned that the central bank is not taking a relaxed approach to the emerging risks. The move by banks to reduce AI exposure reflects broader unease about the stability of the rapidly evolving technology sector.