AI Regulation Struggles to Keep Pace as Banks Accelerate AI Adoption
Artificial intelligence is becoming a core part of the global financial industry, but regulators are finding it difficult to keep up with the speed of adoption.
A new study by the Cambridge Centre for Alternative Finance found that banks, fintech companies, and other financial institutions are adopting AI at more than twice the rate of financial regulators. The report highlights growing concerns that AI regulation in finance may not be advancing quickly enough to match industry developments.
The research was conducted in partnership with organizations including the Bank for International Settlements and the International Monetary Fund. Researchers surveyed 350 banks and fintech firms, more than 140 AI vendors, and 130 central banks and financial authorities across 151 countries.
AI Regulation in Finance Faces Growing Oversight Challenges
The study found that only two out of every 10 regulators consider their AI capabilities to be “advanced.” At the same time, financial institutions continue to expand the use of AI in areas such as fraud detection, customer service, trading, compliance, and risk management.
Many regulators still have limited visibility into how financial firms use AI systems. According to the report, only 24% of regulators actively collect information on AI adoption across the industry. Meanwhile, 43% said they do not plan to begin monitoring AI use within the next two years.
Experts warn that this gap could make it harder for authorities to identify emerging risks before they affect financial markets.
Rising Concerns Over Cybersecurity and AI Concentration
The report comes as regulators and global financial bodies increase warnings about the risks associated with artificial intelligence.
Key concerns include cybersecurity threats, lack of transparency in AI decision-making, and the growing dependence on a small number of AI providers. Earlier this year, Anthropic introduced its Mythos model, which cybersecurity experts said could expose weaknesses in older banking systems.
Researchers also highlighted the concentration of AI providers in the financial sector. Nearly 70% of respondents reported using models from OpenAI. Among financial institutions, that figure rises to 76%.
The study described this dependence as a significant third-party risk. A disruption affecting a major AI provider could potentially impact large parts of the financial industry.
Dependence on a Few AI Providers Raises New Risks
At the time of the survey, conducted between October 2025 and January 2026, slightly more than half of respondents reported using AI models from Google AI. More than one-third said they also used tools from Anthropic.
Researchers warned that the dominance of a small group of providers could leave financial institutions exposed to pricing increases, service outages, and supply-chain disruptions.
As AI adoption continues to accelerate, the report suggests that the biggest challenge may no longer be whether financial firms embrace the technology. Instead, the focus is shifting to whether AI regulation in finance can evolve quickly enough to oversee an increasingly AI-driven and interconnected financial system.
