The Bank of England is working with banks to strengthen cyber-recovery plans as artificial intelligence (AI)-powered cyberattacks pose growing risks to the global financial system, Deputy Governor Sarah Breeden said on Thursday. She warned that financial institutions can no longer assume their cybersecurity defences are impenetrable and stressed the need for independent recovery systems capable of restoring critical services if primary IT infrastructure is compromised.
Breeden said the central bank is encouraging banks to develop “bare metal recovery” options, which operate independently of their main technology systems and can help restore essential services following a cyberattack. Regulators are increasingly concerned that hackers and hostile states could use advanced AI models to exploit system vulnerabilities, while autonomous AI agents could bypass safeguards and behave unpredictably. The International Monetary Fund has also warned that an AI-enabled attack on a critical financial service could undermine public confidence and threaten financial stability.
The Bank of England is also surveying financial institutions to assess their preparedness for quantum computing risks, particularly the potential threat to encryption standards that protect payments, clearing systems and financial communications. Breeden said the findings would help shape a coordinated response across the financial sector, drawing on guidance from the UK’s National Cyber Security Centre. Experts have urged the industry to accelerate preparations, warning that a sufficiently advanced quantum breakthrough could undermine the cryptographic foundations of financial infrastructure.
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