England’s central bank is warning lenders they shouldn’t assume they are invulnerable to artificial intelligence (AI)-powered cyberattacks.
Sarah Breeden, deputy governor of the Bank of England (BoE) said Thursday (Oct. 15) that advances in artificial intelligence (AI) meant the technology now presents a “systemic risk” to the world financial system.
“It’s not enough now to assume that the cyber attackers won’t get through,” said Breeden, whose comments at the Institute of International Finance annual meeting in Bangkok were reported by Reuters. “We need to be thinking about what are the bare metal recovery options … that we need for the core services, and we need to think about that end-to-end across the financial system.”
She added that the BoE is surveying banks on their preparedness for risks that quantum computing presents to encryption and will use the findings to craft a system-wide response for the financial sector.
Breeden said the chief concern is either hackers or hostile nations weaponizing advanced AI models to exploit weaknesses in banks’ systems. Regulators are also concerned about rogue AI agents functioning in ways that are not expected and bypassing banks’ safeguards.
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Bare metal systems are entirely independent from a bank’s main tech set-up and can go to work if primary operating systems are compromised, the Reuters report added.
“Cyber is always the thing that I say keeps me up at night,” Breeden said. “The thing that I worry about the most is waking up and one of our most systemically important banks or a bit of core infrastructure has been attacked and is paralyzed.”
PYMNTS wrote earlier this year about the “strange math confronting every bank, payment network and FinTech on the planet” when it comes to quantum computing: It is overhyped and underestimated all at once.
The tech is overhyped because the commercial applications a lot of people envision—a turbocharged AI—and magical optimization, are mostly fiction.
But quantum computing is underestimated because one of the things it will almost certainly be able to do is break the cryptographic locks securing the modern financial system, locks that will take years to migrate.
“The time to start thinking about migrating to quantum-resistant methods of encryption is now,” Professor Scott Aaronson, who recently joined StarkWare as scientific advisor, said in a conversation hosted by PYMNTS CEO Karen Webster. It needs to happen now, he said, because the transition itself is the bottleneck.
That’s the paradox of quantum computing, at least as Aaronson views it. The technology is nowhere close to delivering on its grandest promises, but its most dangerous capability, codebreaking, doesn’t need to show up tomorrow to require action today.
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