Labour’s impact on UK fintech industry: key areas of focus

Is a better approach to AI needed?

Dan McLoughlin of Lynx believes that despite numerous discussions about AI and its applications in the financial services industry, the strategy to regulate it clearly and effectively remains unclear.

He adds: “A lot of different topics and technologies are now being lumped together under the AI ​​banner. There is a huge difference between generative AI (Gen AI) technologies such as Large Language Models (LLM), deepfakes and the kind of deep learning used to combat financial fraud. There is no one size fits all solution here, so policy clarification will be needed in the coming months.

“The Labour manifesto made no mention of interfering with existing or proposed regulations, so we can expect the Payment Systems Regulator (PSR) Authorised Push Payments Fraud (APPF) regulations, due to come into force in October, to come into effect.

“This is critical because this regulation is being strictly enforced by authorities around the world. It could catalyze global convergence of fraud prevention and anti-money laundering, and highlight the scale of the problem of money mules that finance organized crime around the world.”

The industry will be closely monitoring Labour’s moves once it is in Parliament, particularly its proposal for closer cooperation with the EU.

Dan concludes: “This could lead to compliance with the EU’s third Payment Services Directive (PSD3) becoming mandatory in UK regulation. Either way, UK fintech firms should ensure compliance if they intend to operate in the EU.”

Elsewhere, Tiago Veiga, CEO of Aurum Solutions, argues that there is so much talk surrounding the need to regulate AI that it distracts from taking pragmatic steps that could help make AI safer.