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A recent study highlights a significant gap between the pace at which financial institutions are adopting artificial intelligence (AI) technologies and the ability of regulators to monitor related risks effectively. The findings, published by the Cambridge Centre for Alternative Finance, reveal that only two out of ten regulatory bodies have reached a level of “advanced AI adoption,” indicating that these authorities are falling severely behind the financial sector in harnessing AI capabilities.
Alarming Findings from the Survey
The comprehensive research surveyed 350 traditional financial institutions and fintech companies, alongside over 140 AI vendors and 130 central banks and regulatory bodies from 151 countries. The results paint a troubling picture: only 24 per cent of authorities currently collect data on AI adoption within the industry, while 43 per cent have no plans to start gathering this critical information in the next two years.
“This empirical blind spot may undermine the prevailing optimism surrounding AI,” the report warns. It emphasises that effective oversight of AI technologies is impossible without solid data to inform regulatory frameworks. The research was developed in collaboration with prominent institutions, including the Bank for International Settlements and the International Monetary Fund.
The Rise of Advanced AI Models
One of the key focal points of the report is Anthropic’s AI model, Mythos, which has been flagged by cybersecurity experts for its potential to introduce significant challenges to the financial sector. With the rapid integration of such advanced AI systems, regulators are increasingly concerned about the vulnerabilities they may introduce to existing legacy technology infrastructures.
Regulators have actively engaged with banks to assess how well they are prepared for these next-generation AI models. Mythos is highlighted as a prime example of a system that could exploit software vulnerabilities at scale, which could severely undermine current governance and oversight mechanisms.
Accountability in the Age of AI
The report underscores the principle that financial firms must remain accountable for any harms resulting from AI, including cyberattacks. However, the complexity of autonomous systems, particularly those developed and managed by third-party vendors, complicates this accountability. The authors assert that as AI systems become more autonomous, delineating responsibility for potential harms becomes increasingly challenging.
Harish Natarajan, a practice manager for competitiveness and innovation at the World Bank, noted during the report’s launch that authorities, particularly in emerging markets, often lack both the data and the skills necessary to effectively implement AI. This deficiency presents a significant challenge in ensuring that these economies can leverage AI technologies for competitive advantage.
Concentration Risks Among AI Providers
Another critical concern raised in the report is the financial sector’s growing reliance on a limited number of powerful AI providers. The survey revealed that 69 per cent of respondents depend on OpenAI’s models, with this figure climbing to 76 per cent within the financial industry. This concentration creates a “notable critical third-party risk consideration,” which could expose the global financial system to vulnerabilities related to resilience, pricing shocks, or supply disruptions.
At the time of the survey, conducted between October 2025 and January 2026, just over half of the respondents reported using Google’s AI models, while slightly more than a third had engaged with Anthropic. This reliance on a small number of AI vendors raises alarm bells about the long-term stability and robustness of the financial sector’s technological foundation.
Why it Matters
The findings from this report serve as a clarion call for both regulators and financial institutions. As AI technologies become increasingly integral to the functioning of global markets, the need for robust oversight mechanisms grows ever more urgent. The disparity in AI adoption between financial firms and regulators could not only hinder effective governance but also expose the financial system to unprecedented risks. Ensuring that regulatory bodies can keep pace with technological advancements is crucial for safeguarding the integrity and stability of the financial landscape.
