Mike Budden explores how delegated banking will create a brand new set of FC&C challenges.

Most bank payment controls are built around a fairly simple sequence. A customer gives an instruction, the bank checks that the instruction is genuine and the money moves. Standing orders and direct debits automate the process, but the underlying instruction remains fixed and predictable.

Delegated banking changes that. Instead of approving each individual action, customers may set an objective and a few boundaries, then allow an AI assistant to decide how best to achieve it. That could make managing money much easier. It also creates a very different set of challenges for FC&C.

It means that the next suspicious payment may arrive through a trusted channel, from an approved assistant, using credentials that check out. There may be nothing obviously unauthorised about it.

Imagine that a customer has told an AI banking assistant to pay their regular bills, keep £1,500 available for emergencies and move anything extra into the best savings account it can find. For several months, everything works exactly as intended. Then the assistant instructs the bank to transfer £3,000 to an unfamiliar provider.

The transfer might be a perfectly sensible response to a better interest rate. But it might fall outside the customer’s original intention. The assistant’s permissions may have changed, its source data may have been manipulated or the agent itself may have been compromised.

The bank can authenticate the customer and the assistant. What it can’t immediately know is whether this particular payment still reflects what the customer wanted.

This is not quite as futuristic as it sounds. Research commissioned by the Financial Conduct Authority (FCA) in the UK found that one in five consumers – around 11 million UK adults – would be likely to use AI capable of acting autonomously within pre-set goals. The FCA is already live-testing agentic payments alongside anti-money laundering and KYC applications. 

If delegated banking moves into the mainstream, financial crime controls will have to answer a new question. Not simply, did the customer authorise this transaction? But also, did the transaction remain within the intention they authorised?

From approving transactions to approving rules

Banks already manage payments that customers do not approve individually. The difference is discretion. A standing order follows a fixed instruction, whereas an AI assistant interprets an objective and decides how to achieve it.

The customer might ask it to keep their bills paid, move spare cash into savings or optimise their finances, without ever leaving them with less than £1,500. In other words, they no longer approve every transaction. Instead, they approve the rules by which transactions happen.

This also changes the authentication problem. The bank still needs to know that the customer is genuine. But it must also know which agent is acting, what that agent has permission to do, and whether those permissions remain current. A customer can be real, the assistant can be legitimate and the credentials can be valid – but the resulting action can still be wrong.

Permission is going to need a lifecycle. Customers must be able to understand, amend and withdraw it. Banks must be able to recognise when an instruction has moved beyond an agreed boundary – even if every security check has passed.

Delegated banking represents a shift: from authenticating actions to governing intent.

Follow the decision (as well as the money)

Financial crime investigations are built around reconstructing transactions. Where did the money come from? Where did it go? Which device, account and identity were involved?

While those questions remain important, in delegated banking investigators may also need to reconstruct the decisions that produced the transaction.

What objective did the customer set? Which permissions, data and rules applied? Which agent selected the action? What warnings or overrides followed?

This doesn’t mean demanding an AI model’s private inner monologue. It means recording the decision basis: the inputs used, the boundaries applied, the action taken and any intervention.

That becomes harder when several organisations are involved. An AI assistant may see the customer’s wider finances, a wallet may initiate the payment, and a bank may hold the funds. Each sees a different piece of the journey.

For FC&C teams, Know Your Customer may need to become Know Your Customer, Know Your Agent and Know the Decision Chain.

The answer can’t be: stop everything

Banks could respond with more checks, warnings and blanket payment blocks. That might reduce some risks (but it would also make delegated banking rather pointless).

Not every concern requires that the customer loses access to their account. The bank might only pause our £3,000 transfer, explain why, and open a secure conversation. The customer could confirm it, change the limits or ask for help. 

The underlying decision framework could be simple: act, ask or escalate. It might look like this:

Acts: when a request sits comfortably within the customer’s permissions and normal behaviour. 

Asks: when an action is unusual, approaches a boundary or has significant consequences

Escalates: when there are signs of financial crime, vulnerability or uncertainty that automation cannot safely resolve.

Some customers might allow an assistant to move hundreds of pounds between existing accounts but want to approve every new payee. Another customer might prefer tighter limits or the involvement of a trusted contact.

Good friction is timely, relevant, proportionate, explainable and reversible. Bad friction is generic, unexpected, account-wide and difficult to resolve. No system should be looking to eliminate friction, instead the bank should slow the customer down only when it has a good reason – and can explain what that reason is.

Banking can be delegated but responsibility can’t disappear

What happens when the organisations involved reach different conclusions? The assistant may have broad context but no power to stop the payment. The bank may have the power to intervene but only a partial view. One provider may accept the transfer while another sees a warning sign. Who has the final say?

The legal answer will depend on each participant’s role. But responsibility cannot evaporate into the gaps between them. A customer-appointed AI assistant may raise different legal questions, but the customer expectation will be simpler: do not leave me to untangle your operating model when something goes wrong.

That may require a single accountable front door. Providers can coordinate behind the scenes, but the customer should know who owns the immediate task of stopping further harm, explaining what happened and helping them move forward.

The greatest harm won’t come from the original suspicious transaction, but from nobody owning the resolution journey.

Compliance as competitive advantage

Customers often experience financial crime and compliance as checks, questions, delays and restrictions. Most of the protection remains invisible, so they only notice it when something stops working.

Delegated banking creates an opportunity to change that. Clear permissions show where automation begins and ends, and proportionate interventions demonstrate that the bank is paying attention. Similarly, good explanations turn an obstacle into an understandable safeguard. A capable person appearing at the right moment shows that automation hasn’t replaced accountability.

Trust doesn’t mean believing that nothing will ever go wrong. It means knowing that the boundaries are clear, unusual decisions can be challenged and someone will take responsibility when a problem occurs.

Instead of a faceless function sitting behind the customer experience, compliance could become part of the reason customers feel confident enough to delegate in the first place.

The banks that earn permission to act will be the ones that can answer three simple questions: What did the customer intend? Why did the system act? And who is responsible for what happens next?

To dive deeper into delegated banking and the future for banks and customers, download our white paper From Digital Banking to Delegated Banking: Three uncomfortable truths about what customers will choose by 2035, or get in touch with us for a conversation.