How AI is changing financial services compliance

Of all the aspects of financials services that are and will be impacted by artificial intelligence, compliance might be one of the most vulnerable (or accessible, depending on how you look at things). 

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For most of the past two decades, a compliance career in a big bank started the same way. The industry was built much like a pyramid, explained RegTech firm WorkFusion. RegTech stands for regulatory technology - the practice of disrupting traditional regulatory processes with technology, much like fintech is to finance. Workfusion said, traditionally, it was a wide base of level one analysts, a narrower band of level two investigators/managers, and a thin layer of senior experts at the top.

That is changing, however, and AI is the cause. “This model worked when alert volumes were manageable, and investigations were largely manual,” WorkFusion said. “That world is gone.” Much of the lowest tier of work, the one that juniors cut their teeth on, can be automated. That work included gathering and synthesizing data, as well as reviewing transactions and customer profiles.

Compliance is particularly exposed to AI. Writing in May this year, the UK's financial services skills commission (FSSC), said 27% of regulatory compliance functions could be automated by agentic AI, and that 42% of compliance monitoring functions could be automated.

Those functions include tasks such as fraud detection, anti-money laundering (AML), and Know-Your-Customer (KYC). According to the 2026 Global AI in Financial Services Report from Cambridge University’s Judge Business School, said 29% of finance firms were automating fraud detection, and another 28% were working towards that same point. 

Surely this is bad for compliance jobs? The FSSC disagreed. “It seems unlikely that masses of jobs will be lost to AI anytime soon. Ultimately, AI will be treated as a team member to whom tasks can be assigned,” the FSSC said. “Increasingly, individuals will oversee the work of AI agents and critique their outputs, moving away from traditional duties.”

The good news is that compliance, by its nature, is slow-moving. That is partly by design, of course, but according to Dutch software firm Wolters Kluwer’s Q1 2026 banking compliance AI trend report, just 12% of firms have “well-defined and resourced” AI strategies, while another 42% have some sort of plan emerging or forming. For comparison, that appears to be less than the famously glacial asset management industry. In compliance specifically, Wolters Kluwer notes that around 31% and 28% of finance firms are using or exploring the use of AI in fraud detection and compliance, respectively. That does not seem to be enough. 

The UK’s Financial Conduct Authority (FCA) might offer a clue to the future. Earlier this year, it partnered with finance firms, including Barclays and UBS, to test the application of some AI functions including AML and KYC, among others. As is natural, the FCA emphasised that the goal would be the “safe and responsible development of AI,” to eventually “harness innovation responsibly.” That might seem comically boring (and European), but it’s about as strong a sign as a civil service can offer: AI is here to stay, might as well regulate it.

The future will likely match patterns seen elsewhere: managerial experience (of managing AI) from early in one’s career. “AI‑literate compliance professionals who can supervise digital workers,” WorkFusion called it. Some tasks will still go to flesh-and-blood people, however: “escalation specialists who handle complex, judgment heavy cases.” Most people will be “hybrid talents”.

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