AI adoption in the UK’s financial sector has surged, with 75% of firms now integrating AI into their operations, up from 58% the previous year. However, a significant knowledge gap persists—nearly half of these firms admit to only partially understanding the AI systems they use. This is especially concerning given the heavy reliance on third-party vendors and the growing complexity of AI models. While AI is enhancing fraud detection, data analytics, and cybersecurity, firms face mounting risks related to data privacy, regulatory compliance, and model transparency.