The Bank of England has warned financial institutions to strengthen their cyber-recovery plans as increasingly advanced artificial intelligence could help criminals exploit weaknesses in banking systems.

On 15 October 2026, Deputy Governor Sarah Breeden said banks could no longer assume their digital defences would prevent every attack. The central bank is working with financial institutions to improve recovery plans in case a cyber incident disrupts essential services.

Independent Systems Could Help Banks Recover

One focus is “bare-metal” recovery: independent technology systems that can restore core banking operations if a bank’s main IT infrastructure is compromised.

The approach is intended to help protect essential services, including payments and financial communications, during serious cyber incidents. Regulators are particularly concerned that malicious actors could use advanced AI models or autonomous AI agents to identify vulnerabilities and bypass safeguards.

Quantum Computing Adds a Longer-Term Challenge

The Bank of England is also surveying financial firms about their readiness for future quantum-computing risks. A sufficiently capable quantum computer could threaten some encryption methods currently used to secure financial data and transactions, although the timing of that threat remains uncertain.

The findings are expected to inform further work with the UK’s National Cyber Security Centre and the wider financial sector.

The warning highlights why AI cybersecurity, operational resilience and preparation for post-quantum encryption are becoming increasingly important for UK banks and technology teams.