Only 14% of financial services firms have AI in corporate strategy

19 June 2024 Consultancy.uk 4 min. read

The benefits of artificial intelligence for the financial services sector are supposedly massive. But financial leaders do not seem gripped by the same sense of FOMO that many other businesses exhibit regarding the technology, with just 14% having integrated it into their corporate strategy.

Blockchain technology – defined as a digital system in which a record of transactions, especially those made in a cryptocurrency, is maintained across computers that are linked in a peer-to-peer network – was initially hyped as the next big thing because of its purported invulnerability to being hacked, and transparency measures which could ensure stable trading of assets – leading to some studies to hastily suggest it would add as much as $21 trillion to global GDP by the end of the decade.

However, fears around the technology’s reliability and security meant that it has never lived up to the hype, in terms of profitability or usage. This has been most apparent in the financial services sector – the realm in which blockchain was supposedly most important.

Only 14% of financial services firms have AI in corporate strategy

A study in 2022 found that with billions in cryptocurrency still stolen by hackers each year – and blockchain failing to prevent that – only 13% of financial services leaders had maintained their rate of investment in the technology.

Less than two years later, industry observers will no doubt be drawing parallels with the industry’s next big technological hope: artificial intelligence. The technology has followed a similar early trajectory to blockchain, with early promises that its speed and alleged accuracy would create a market worth $100 billion, and render millions of jobs obsolete across all industries. And in the financial sector, hurriedly assembled research crowed that the technology could yield $1 trillion in revenue improvements to the banking segment alone.

Despite this period of excessive hype, however, financial leaders seem largely unmoved by AI – at least in its current form. A survey of 70 senior leaders from the UK’s largest financial services brands has found that only 14% have bothered to integrate AI into their corporate strategy so far.

The survey was conducted by Kin + Carta during the recent UK FWD24 summit, which it hosted in New York City and London. In the UK leg, the consultancy polled leaders from firms including clients such as Santander and Skipton Building Society, asking them how they planned to accelerate “next-gen transformation in the face of uncertainty”.

The fact that only one-in-seven said AI was worth baking into their strategies in this context hardly seems like a vote of confidence – and investors in the firms behind the tools might be further upset by the other questions they were fed. A 26% portion added they were only in very early stages of exploring use cases. And while 43% had a proof-of-concept project in development for using AI in their firms, just 17% had managed to progress these into key AI initiatives which they could push ahead with.

As was the case with blockchain before, then, it seems that while many studies insist there is a surge of interest in AI and generative AI adoption – and this may be true of banks, primarily focused on internal efficiency gains – many firms are reluctant to take a leap of faith on the technology. Especially not when the sector will have to reckon with regulatory, ethical and security concerns when adopting it.

Phillip O’Neill, director of financial services for Kin + Carta in Europe, commented, “Given the critical role banks play in our societies, a cautious approach that prioritises internal efficiencies over customer-facing applications is understandable. Most importantly, GenAI shouldn't be implemented simply because it's available. Financial services institutions must prioritise their strategic goals and desired outcomes, then explore how GenAI can contribute as a solution, rather than letting the technology define the problem.”