AI-Enabled Fraud Outpacing Defences: The Payments Association Reveals 2026/27 Risk Landscape

The Payments Association has identified AI-enabled fraud as the most significant threat outpacing industry response capabilities in its latest landscape report. For fintech professionals, this highlights a critical gap between criminal innovation and institutional governance, necessitating a shift toward real-time intelligence sharing and formalized accountability for automated fraud detection systems.

What was announced

The Financial Crime Landscape 2026/27 Report, produced by the Payments Intelligence team at The Payments Association, draws on findings from the Financial Crime 360 conference held in November 2026. The research indicates that AI-enabled fraud is the risk rising fastest relative to the ability of firms to respond, with two in five financial crime decision-makers reporting a lack of practical guidance on AI governance.

The report outlines several strategic recommendations for payments firms to manage the dual challenge of defending against AI-driven attacks while overseeing their own defensive AI. It suggests assigning a specific accountable owner to every AI system used within fraud controls. Furthermore, firms are encouraged to document precise protocols for when staff should intervene and implement rigorous tracking to determine whether AI systems are missing fraudulent activity or incorrectly blocking legitimate transactions.

Data sharing emerged as a primary theme for future success. In a poll conducted during the conference’s Fraud Strategy session, 63% of respondents identified real-time data sharing between firms as the most critical factor for the success of the national Fraud Strategy. The report also addresses the need for regulatory clarity regarding payments initiated by AI agents, particularly in cases involving execution errors, fraud, or disputes over authority. The findings are based on live polls and interviews from the event, which hosted over 1,000 attendees to discuss regulatory preparedness and financial crime response.

"AI-enabled fraud was the risk most often identified in our event polls as rising faster than firms could respond. In our separate Pulse Survey, two in five financial crime decision-makers said the industry lacked practical guidance on AI governance. For payments firms, that puts two questions on the agenda. Can their defences keep pace with how fraudsters use AI, and can they show that the AI they use to detect fraud is working?"

Benjamin David, Head of Intelligence at The Payments Association.

The companies involved

The Payments Association is a prominent industry body representing the payments sector, focusing on collaboration, commercial interests, and regulatory influence. Formerly known as the Emerging Payments Association, the organization underwent a significant rebranding on October 8, 2021, to reflect its broader role within the evolving financial ecosystem. It serves as a hub for banks, fintechs, and service providers, facilitating events like Financial Crime 360 to address systemic challenges such as money laundering and payment security.

The association operates through several specialized arms, including Payments Intelligence, which provides the research and analysis underpinning its strategic reports. By leveraging its membership base, the association aims to influence national policy and set industry standards. Its focus has increasingly shifted toward the intersection of technology and crime, particularly as the UK and global markets grapple with the transition to more automated and real-time financial infrastructure. The organization remains a key intermediary between private sector participants and regulatory bodies.

What FF News has reported before

FF News has closely followed the strategic output of The Payments Association, particularly its focus on UK infrastructure and international standards. Recently, the publication covered how The Payments Association Unveils 2030 UK Strategy to Secure Critical National Infrastructure, alongside a similar report on the 2030 Manifesto to Modernize UK Financial Infrastructure. The association has also been vocal about the limitations of current metrics, as seen when The Payments Association Warns Global Cross-Border Targets Risk Masking High Costs. Additionally, FF News previewed the event where this latest data was gathered, noting that UK Financial Crime Leaders Converge at Financial Crime 360 as FCA and Bank of England Take the Stage.

What this means

The industry is currently caught in an "AI arms race" where the defensive side is hampered by legacy governance structures. While fraudsters can deploy generative AI with zero oversight, regulated firms are struggling to balance rapid detection with the need for explainability and "human-in-the-loop" requirements. The call for real-time data sharing is significant, but it places immense pressure on the sector to overcome long-standing competitive and legal barriers to information exchange. Without a unified framework for AI agent liability, the market risks a chilling effect on innovation as firms hesitate to adopt automated payment technologies due to unclear dispute resolution paths.