According to David Runacres, the recent challenges faced by the financial industry underscore the fact that resilience involves more than just problem prevention—it’s about recovery readiness. “A challenge to your resilience can come from anywhere,” he noted, highlighting that ensuring fast and clean recovery is now the focus.

To strengthen resilience, financial institutions are integrating cybersecurity measures that go beyond mere prevention, focusing instead on recovery after inevitable disruptions. “It’s about having systems that can step back in time,” Runacres explained, referencing Broadridge’s customer-partnered solutions that help institutions restore systems to their pre-disruption state. Best practices include maintaining air-gapped memory and storage, which Runacres described as essential for resilience, especially in markets with proximity and are prone to natural disasters like Japan.

But resilience isn't just about system recovery. As digital threats evolve, businesses are adopting a mindset of "realistic paranoia", he added. “You have to assume problems will come from anywhere,” Runacres emphasised.  A geographical proximity approach, especially in disaster-prone regions, is another layer of protection. These elements collectively contribute to the operational resilience that is critical for financial institutions.

Balancing the need for innovation while maintaining robust risk management frameworks is increasingly challenging. Runacres believes that innovation is accelerating, and institutions must ensure that their platforms are resilient before they can innovate at scale. The rapid pace of regulatory changes adds to this complexity, but by prioritising a strong foundation in cybersecurity and operational resilience, financial firms can better navigate the balancing act between innovation and security.

Artificial intelligence (AI) is revolutionising financial services by enhancing decision-making processes and improving customer experiences. However, its integration also presents significant ethical and regulatory challenges. “AI was once a solution looking for a problem,” Runacres observed, but today, AI is being deployed in more meaningful ways.

One of the most transformative applications of AI in financial institutions is the automation of compliance processes. Runacres cited an example where AI-generated code is used to implement regulations directly into financial systems, cutting down on manual steps. AI is also being leveraged to analyse large datasets and identify anomalies, particularly in risk management.

AI’s potential to enhance customer experiences while ensuring privacy and security is a key area of focus. Technologies like federated learning and multi-party computing are helping firms use AI for decision-making without compromising sensitive data.  “It sharpens communication within and outside the organisation,” Runacres noted, highlighting the role of AI in enhancing interactions with both customers and stakeholders.

Despite its promise, AI also raises ethical concerns, particularly around data usage and security. As AI systems are trained on vast amounts of data, ensuring that the input data is accurate and secure becomes critical. Additionally, the regulatory landscape around AI is still developing. “We don’t yet have a comprehensive regulatory framework for AI,” Runacres admitted, but he anticipates that as use cases become clearer, regulations will follow suit.

Financial institutions are already investing heavily in AI infrastructure, including hardware like graphical processing units (GPUs). However, Runacres warns that this is an expensive endeavour, likening it to an “arms race". He also raises concerns about the risks associated with open-source AI tools, although he notes that intelligent use of such tools can still offer significant advantages.

As financial institutions continue to embrace AI, they must weigh the cost-benefit balance and remain vigilant in addressing ethical and regulatory concerns. By integrating AI responsibly, firms can enhance their operations while maintaining customer trust and regulatory compliance. He proffered that as financial institutions strive for digital operational resilience and AI-driven innovation, they must remain grounded in robust risk management frameworks. By balancing these priorities, they can navigate the complexities of modern financial services, albeit with a dose of paranoia.