The Bank of England and the Financial Conduct Authority (FCA) have jointly published a report indicating that 75% of financial firms already use artificial intelligence (AI).
AI rocketed to public perception following the release of ChatGPT. Consumer development of AI fueled a need for all firms to pursue AI with investment jumping dramatically. While many financial services firms and Fintechs had long been active in the AI/ML sector, today there is a sentiment that if you are not building AI into your services your are falling behind.
The survey notes that while 3/4s of firms are using AI, another 10% intend to do so within the next three years. In 2022, a similar survey indicated that just 58% of financial services firms were using AI.
The data shows the highest perceived benefits are services addressing analytical insights, AML/anti-fraud efforts, and cybersecurity. In the next few years, firms anticipate AI will help them improve “operational efficiency, productivity, and cost base.”
Concerns regarding the use of AI include data privacy, security, protection, quality of information, and potential bias.
Third-party dependencies, complexity, and “hidden models” may become issues in the next three years.
According to the survey, the perceived benefit going forward is 21% greater than the perceived risk of 9% over the next three years.
84% of firms reported having an accountable person for their AI ecosystem, and 72% said their executive leadership is accountable for AI use cases.
Michael Aldridge, President and CRO of Accelex, commented on the report. Accelex is a firm that leverages AI for alternative investments. Aldridge noted that since ChatGPT’s launch in 2022, interest in AI has skyrocketed, with financial firms exploring and implementing the technology.
“These firms are recognizing AI’s transformative potential to enhance efficiency, generate valuable insights, and maintain a competitive edge. In private markets, for instance, AI adoption is accelerating manual processes like intelligent document capture and data extraction, significantly enhancing operational efficiency while boosting portfolio transparency.”
Aldridge says the research also highlights the gap in compliance and oversight, which is a challenge for financial firms as well as an opportunity.
“Firms that move quickly to implement strong AI governance will not only align with regulatory expectations but will also bolster operational resilience and investor confidence, positioning themselves as industry leaders.”
Aldrige adds that effective AI governance is not just about regulatory requirements, but it is essential for building trust and transparency while “fostering sustainable growth in an increasingly data-driven landscape.”
The report is available here.