Britain risks becoming “second in the queue” for AI unless it invests more in domestic infrastructure, a government AI adviser has warned, as Starling Bank becomes the first lender to train an AI model on a UK sovereign cloud.
Harriet Rees, Starling’s chief information officer and the Treasury’s AI champion for financial services, warned that British banks’ reliance on a handful of US tech giants was exposing the financial system to geopolitical risks.
“We’re always going to be second in the queue if we don’t have our own infrastructure, our own models, and some of this stuff really based here in the UK,” Rees told City AM.
Her warning comes as Starling announced plans to develop an AI model using more than 15bn anonymised transactions, trained on infrastructure owned by British cloud provider Civo, using Nvidia technology.
The bank plans to deploy the model in early 2027, initially to improve fraud detection before integrating it into its AI financial assistant.
Rees, who co-authored the government’s financial services AI adoption plan in July, warned that dependence on American cloud providers such as Amazon, Microsoft and Google could leave banks vulnerable to political disruption.
“If it becomes a political matter, then we have less resilience, and that’s why things like sovereign AI become very much to the fore,” she said.
While banks have safeguards against cloud outages, Rees said foreign ownership posed risks that technical backup systems could not fully address.
Government urged to boost UK AI investment
Rees called on ministers to increase investment in British AI infrastructure, arguing that the government’s £500m Sovereign AI fund fell short.
“Anyone in this space knows that £500m pounds is really not a lot of money”, she said. “If we’re serious about this, we need to be able to dig deep into the pockets.”
Her comments follow calls from British tech bosses, including executives at BT and Leonardo, for more than £20bn of investment in sovereign AI infrastructure over five years.
Rees acknowledged that British cloud providers struggled to compete with the scale and resources of American giants, but rejected suggestions that the UK should accept permanent dependence.
“I think we should absolutely have the ambition to have great AI infrastructure companies based here in the UK,” she said.
She suggested ministers could incentivise businesses to use domestic providers, arguing that British cloud services should be cheaper and easier to access.
AI squeezes job market
The announcement comes three months after Starling revealed plans to cut 130 jobs while increasing investment in AI.
Rees insisted the restructuring was not directly linked to automation, but acknowledged that the technology would reshape banking employment.
“This technology fundamentally will change people’s jobs. It will mean that some things that humans had to do no longer need to be done by a human,” she said.
She warned that workers without AI skills would face growing disadvantages in the jobs market, urging businesses and government to invest in training.
Rees also raised questions about how far AI could eventually manage customers’ finances without human oversight: “The jury’s still out as to what exactly that’s going to look like,” she said.