Financial services CEOs embrace AI in spite of concerns

16 August 2023 3 min. read

Almost half of financial services firms around the world have already integrated an AI-driven product or service change into their capital allocation process. However, many seem to have taken a worrying leap of faith with these innovations, as more than six-in-ten leaders in the sector believe they are not doing enough to manage “unintended consequences” of the technology.

Since the turn of the year, growing hype around the potential of AI technologies has boosted confidence significantly. For instance, some studies have suggested the UK’s battered economy could get a much-needed £31 billion boost from the widespread adoption of generative AI, with the technology boasting the potential to increase UK productivity by 1.2% each year. As a result, business confidence in the UK rose to a net positive of roughly 43% – the highest seen since before the pandemic.

A new paper from EY suggests that the global financial services sector is unanimously aboard this same hype-train. The firm’s ‘CEO Outlook Pulse Survey’ found that around the world, 43% of financial services operators have already fully integrated AI-driven products or service changes  into their capital allocation process, and are investing in AI-driven innovation.

Financial services CEOs embrace AI in spite of concerns

At the same time, 45% of respondents told EY that while they had not yet made significant capital investments, they would be sinking funding into AI solutions in the coming year. Just 12% meanwhile suggested they had no plans to do so.

The scene in Europe specifically was even more enthusiastic, too. Of the financial services leaders EY surveyed there, 94% were integrating AI into their capital allocation. Of those, 51% of CEOs were actively investing in the technology, and 43% were planning to make significant investments in AI in the next 12 months.

In line with this, businesses were largely optimistic about AI. When asked how they felt about AI as a ‘force for good’ – defined as something which can drive business efficiency – 36% of leaders agreed somewhat, and 29% agreed strongly that it would help lead to improvements across all sectors, from healthcare, to education, to finance. Interestingly, European financial services leaders were less chipper, however – with just 56% agreeing with the same statement.

Financial services CEOs embrace AI in spite of concerns

This may tie to the risks tied to new technology, which all global financial services leaders seemed somewhat wary of. A 67% majority said that the business community needed to focus on the ethical implications of AI, with areas of impact including privacy. Meanwhile, 65% were concerned that AI could allow "bad actors" to use the technology in harmful ways – from cyber-attacks to deepfakes and disinformation.

But despite many CEOs in financial services being aware of these risks, it appears little is being done to prepare for them. A 64% chunk of leaders said they were “still not doing enough to manage the unintended consequences of AI” – which is not only a matter of concern to them, as most of them are presently pouring money into AI developments they do not entirely trust; but also to wider society, whose financial system could be significantly weakened if they do not act more definitively.

Looking at the challenges ahead, EY EMEIA Data & Artificial Intelligence Financial Services Partner Patrice Latinne commented, “Europe’s financial centres are increasingly tapped into the disruptive capabilities that AI offers today. AI is infinitely innovative, which – while exciting – comes with challenges. Governance and transparency are increasingly crucial to the safe adoption of the technology, and ethics must remain central as firms progress their tech capabilities. With many firms and individuals maintaining an understandably cautious attitude, particularly towards generative AI, building confidence focused on the exponential value to be created will be fundamental to successful implementation.”