ASX-listed British bank, Virgin Money (LON:VM), plans to invest £130 million ($250 million) over three years to fortify its defences against the escalating threat of AI- and quantum-enabled fraud and cybercrime.
The bank, Britain's sixth-largest, acknowledges this investment as a necessary measure despite the anticipated short-term impact on profits.
Virgin Money chief executive officer David Duffy emphasised the urgency of the situation, citing the exponential rise in threats facilitated by advanced technologies like large language models and quantum computing. These technologies, according to Duffy, enhance the sophistication and threat level of cyberattacks, including deep fake videos, email authenticity and text-based frauds.
The bank's strategy to counter these threats includes a significant investment in AI-driven security solutions. In the first year, around £40 million ($76 million) will be allocated to develop AI models for risk data aggregation and internal risk reporting, aligning with regulatory requirements.
Virgin Money's move to preemptively tackle these threats aligns with its broader strategy of transitioning into a digital-first bank. This approach is particularly crucial as the bank competes against larger British retail banks.
Despite a 42% fall in full-year profit — largely due to conservative provisioning against potential bad debts — the bank has seen an 8% rise in underlying operating income and an improved net interest margin.
To mitigate the financial impact of this cybersecurity investment, Virgin Money plans to balance its expenditure with property savings, having reduced its physical branch network significantly.
This strategic initiative reflects a growing trend among financial institutions worldwide, including those in Britain and Australia, to enhance cybersecurity in response to evolving digital threats. Duffy expects similar investments in cybersecurity by other banks globally, underlining the importance of effective cooperation and shared learning among financial institutions to combat these sophisticated cyber threats.