The latest research conducted by the Bank of England and the Financial Conduct Authority (FCA) highlights a significant leap in the adoption of AI within the UK Financial Services sector.
According to Tech Market View, with 75% of firms now employing AI technologies to some degree—an increase from 58% in 2022 and a mere 14% in 2019—the landscape of financial technologies is rapidly evolving. This third iteration of the survey shows not just widespread adoption but also an active planning stage, with an additional 10% of firms preparing to integrate AI in the next three years.
The current use of AI primarily involves third-party services, with major SITS providers playing a substantial role in cloud, model, and data provisions, highlighted by their high percentages of implementation across surveyed firms. The survey also notes a considerable emphasis on automated decision-making, with 55% of AI applications featuring some level of automation, though only 2% achieve full autonomy.
Moreover, while a third of the respondents report a complete understanding of the AI technologies employed, nearly half admit only a partial grasp, mainly due to the complexities associated with third-party AI solutions. This lack of full transparency points to a potential risk area that could impact effective management and oversight.
The perceived benefits of AI are predominantly seen in enhanced data analytics, anti-money laundering efforts, and cybersecurity enhancements. Looking forward, firms anticipate that AI will deliver significant improvements in operational efficiency, productivity, and cost-effectiveness. However, cybersecurity remains the principal concern, reflecting worries about third-party dependencies and other risks related to data management such as privacy, security, and potential biases.
Despite these challenges, the proactive stance of UK financial firms towards AI governance is notable. A substantial 84% have appointed specific individuals accountable for AI policies, ensuring that governance frameworks are robust and involve multiple accountable entities.
This surge in AI integration within UK financial services underscores a sector poised for further innovation and efficiency gains, albeit tempered by careful consideration of the associated risks and dependencies.
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