Why UK & US Fintech Must Fast-Track Quantum Resilience and AI-Proofing Now

The financial technology sector—from established payment rails to nascent crypto platforms—is navigating an unprecedented convergence of sophisticated threats. For UK and US firms, this isn’t just a matter of managing risk; it is an existential imperative. Data shows that finance has become the most targeted sector, accounting for 27% of all data breaches globally, with the average cost per incident soaring to $5.9 million. As state-sponsored actors amplify their campaigns and generative AI lowers the barrier for complex attacks, the time for passive defense is over.

This piece explores the immediate and future threats defining the fintech security landscape for 2025 and outlines the proactive, data-driven strategies necessary for firms to survive and thrive.

The AI-Driven Frontline: Deepfakes and Autonomous Malware

The sophistication of cybercrime has entered a new phase, driven by generative Artificial Intelligence. Attackers are now leveraging AI to mutate malicious code in real-time, allowing for AI-driven malware that evades traditional static detection systems.

This new automation has made the oldest attack vector, social engineering, exponentially more dangerous. The data is stark: over 90% of all successful cyberattacks begin with a phishing attack. Fintech firms are the primary target for these campaigns.

The weapon of choice is increasingly the deepfake. Scammers are using sophisticated audio-video manipulation to convincingly impersonate executives, partners, or customers, fooling employees into transferring funds or disclosing critical credentials. This is no longer a theoretical threat; it is an active vulnerability amplified by the global shift to remote and hybrid work models.

Case Example: The Cost of a Compromised Ecosystem

The sheer financial scale of these breaches is accelerating, particularly within the crypto sphere. Despite a 54% drop in 2023, crypto platforms still suffered $1.7 billion in losses, followed by a surge to $2.2 billion in 2024, highlighting the persistent, high-value target that digital assets represent. Whether it is a smart contract vulnerability leading to multi-million-dollar losses, such as the MonoX Finance incident in 2021 where $31 million was lost, or major exchange hacks, the financial and reputational damage is acute.

Supply Chain Risk and the Widening Attack Surface

The modern fintech firm relies on a complex web of third-party vendors, APIs, and cloud-based services. This necessary agility has created profound security vulnerabilities. Industry studies have found that as many as 41.8% of fintech breaches originate from third-party vendors.

The Third-Party Nexus

Recent incidents underscore the fragility of this ecosystem:

• Finastra (UK): Reports surfaced in late 2024 of a massive data leak involving 400 GB of bank client records, reportedly stemming from a vendor-related incident.

• FinWise Bank/American First Finance (US): A clear example of insider threat, where a former employee accessed sensitive files, exposing the personal information of nearly 700,000 customers in a September 2025 breach.

• Cash App (US): An insider leak exposed the investment account data, names, and account numbers of 8.2 million customers.

Furthermore, API security vulnerabilities represent an increasingly exposed entry point for attackers, often leading to the compromise of sensitive financial data. To counter this fragmented threat landscape, fintech leaders are turning to integrated resilience programmes and foundational architectural shifts.

The strategic answer to this risk diversification is the Zero Trust Architecture (ZTA), which mandates strict identity verification for every person and device attempting to access network resources, regardless of their location. Zero trust becomes the new hot thing as perimeter-based security is rendered obsolete.

The Quantum Crucible: Preparing for ‘Q-Day’

Looking beyond immediate threats, the single greatest long-term security challenge for the financial sector is the impending arrival of cryptographically relevant quantum computers (CRQCs).

Current digital security relies heavily on public-key cryptography—specifically RSA and Elliptic Curve Cryptography (ECC)—to secure transactions and customer data. The advent of CRQCs, powered by algorithms like Shor’s, could theoretically break these encryption methods in minutes, leading to a “Q-Day” where previously secure financial data could be decrypted retrospectively or exploited in real-time. This affects everything from online banking and digital wallets to the underlying security of blockchain technologies.

Proactive Measures and Regulatory Alignment

Firms must begin the journey to post-quantum cryptography (PQC) now. This involves migrating to new, quantum-resistant algorithms that can withstand these future threats.

The US National Institute of Standards and Technology (NIST) is actively finalising standards for these quantum-resistant algorithms, providing a critical foundation for the transition.

The industry is already mobilising:

• Innovation for Defense: Major institutions like Lloyds Banking Group are actively experimenting with quantum algorithms, partnering with IBM to explore how this computational power can be harnessed for real-time fraud detection—a powerful use case that turns a threat into an opportunity.

• Regulatory Stance: In the UK, the Financial Conduct Authority (FCA) has confirmed its outcomes-focused approach applies to the use of AI, relying on existing regulatory frameworks to mitigate risk. In the US, agencies like the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have also confirmed their existing authority extends to regulating AI use in finance.

The Call for Coordinated Accountability

Beyond internal defense, there is a mounting cross-industry call, particularly in the UK, for a fairer regulatory structure. The financial industry currently shoulders an immense annual compliance cost—estimated at £38 billion—largely driven by Anti-Money Laundering (AML). However, the vast majority of consumer fraud now originates on social media, messaging apps, and phone networks. Lawmakers are being pressed to create a framework that imposes comparable, meaningful accountability and cost exposure on the technology platforms that host these initial scams.

For fintech leaders in the UK and US, the mandate is clear: defend now and modernise fast. This requires a dual-pronged strategy: implementing immediate architectural changes like ZTA to counter AI-driven threats, while simultaneously engaging with PQC migration to safeguard against the quantum future. The cost of neglect spans regulatory fines, operational failure, and irreversible capital flight.

• Read more under:
• Artificial Intelligence
• Digital Banking