UK financial services drag feet on AI adoption amid uncertainty

The UK financial services sector is still moving slowly to adopt AI and Generative AI, as hype cools around the technology. A new study suggests that only one-third of those implementing AI believe they are “on track”, while the majority are hanging back in the experimental phase – with its future still uncertain.

Generative artificial intelligence (GenAI) is a subset of AI technology, using generative models to produce text, images, videos, or other forms of data. While proponents of the technology argue this offered unparalleled speed and efficiency in processing complex data, such models are famously prone to ‘hallucinations’ (known in the human world as ‘mistakes’) and often generate inaccurate responses to queries.

After three years of red-hot hype around the technology’s apparently limitless potential, the corporate response to it seems to have become jaded, as a result. However much money might have been pumped into AI experiments by firms to date, large numbers do not seem to be prioritising their GenAI projects in a way the initial excitement suggested they would.

A new study from EY has reflected this by looking at attitudes to GenAI in the financial services sector of the UK. Having previously the last vestige of optimism around technology such as blockchain and the metaverse, the industry is still happy to talk it up – particularly as a means to discipline its workforce with the threat of redundancy – with 59% of executives telling EY they forecast 25% of current UK financial services roles could be ‘impacted’ by ongoing AI integration in the next year, while 95% added they though up to 10% of roles could be replaced entirely.

But while they talked a big game, their actions might suggest less of an unshakable confidence in the technology of the future. The study found that only 32% of executives at firms integrating any kind of AI into their products believe they are on track with that process. And while another 32% say they have accelerated overall AI adoption over the last year, mostly that is firms that had done little previously, entering the exploratory phase. Mainly, the rest remain in the experimental stages, especially when it comes to GenAI – while only 5% rank themselves as being ahead of the curve.

Of the 20 UK financial services polled, with an aggregate market cap of almost £200 billion, just 9% of executives said their firm is prepared for incoming AI regulation – even as the regulatory picture continues to develop. Meanwhile, even though 77% acknowledged their workforce had ‘some, limited or no experience’ of new GenAI-related technologies, a minority of 27% have actually established new training and upskilling programmes, with 63% still in the planning phase. Either this suggests that they expect GenAI to be powerful enough to work without much insight on the part of their staff, or they still see the technology as something they should look at before leaping – something EY warned against.

Anna Anthony, EY UK financial services managing partner, commented, “While some firms have made huge strides in adopting AI and have seen material benefits, many are struggling to keep pace and have considerable work to do to get up to speed with regulatory standards. GenAI is, without doubt, developing faster than other technological innovations of recent times, and requires new, specialist skill sets. For firms to remain competitive it will be essential that they develop and roll out new training and upskilling programmes and put in place appropriate risk and regulatory control frameworks.”

Amid a consulting industry slowdown where demand for advisory experts has cooled, assisting clients with the implementation of GenAI technology has been seen as a key opportunity for the sector. Like most of the largest professional services firms, EY has been investing heavily in AI services in recent years. For example, EY investments of $1.4 billion have provided the foundation for the EY.ai platform, as well as helping secure a series of technology acquisitions with cloud and automation technologies.