UK financial firms struggle with AI & GenAI integration

A new survey indicates that United Kingdom financial services firms are facing challenges in the adoption and regulation of Artificial Intelligence (AI) and Generative AI (GenAI) technologies.

The EY European Financial Services AI Survey revealed that although 91% of UK firms have introduced some form of AI into their operations, a significant 95% of these firms are in the early stages of this integration. A small minority, 5%, have not incorporated AI at all. The study covered 20 UK firms with a combined market capitalisation of nearly GBP £200 billion.

Currently, only 32% of firms believe they are on track with their AI integration efforts, and a mere 9% feel ready for impending AI regulations. Moreover, 14% have yet to establish an AI regulatory risk framework. This is compounded by only 27% of firms having instigated GenAI training programmes, even though 77% of leaders recognise their teams' limited capability with GenAI technologies.

Anna Anthony, EY UK Financial Services Managing Partner, stated, "GenAI is considered a top priority among UK financial services executives, who recognise the importance of harnessing such a game-changing technology for the productivity and efficiency gains it can bring. However, there are a number of challenges when it comes to fully embedding a fast-evolving technology into operations and across workforces." Anthony added, "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."

The survey found that 59% of executives predict that up to 25% of current roles could be impacted by AI within the next year, with redundancies projected for as many as 10% of roles. However, only 27% of firms have established AI training programmes, and 36% remain without any concrete plans for such initiatives.

Entry-level positions are expected to feel the greatest impact, with 59% of executives expecting AI technologies to significantly change these roles. Despite this, a limited 14% plan to restructure these positions, and only 18% are looking to integrate AI training into graduate programmes.

Data science and innovation is highlighted as the sector most in need of AI expertise, identified by 64% of respondents, followed by front office operations (50%), back-office operations (45%), and information technology (41%). Firms are prioritising attributes such as an innovative and experimental mindset (82%), adaptability (64%), and collaboration skills (50%) when recruiting for AI-enabled roles.

Investment in GenAI is confirmed as a major focus moving forward, with 82% of firms planning to increase their capital allocation to this area. However, concerns about regulatory impacts, a limited understanding of GenAI applications, and the rapid pace of AI development remain significant challenges.

Preetham Peddanagari, EY UK Financial Services Technology Consulting Leader, commented, "GenAI technologies are set to transform the UK financial services industry, across both the front and back-office. While there are a small number of firms that are in the advanced stages of embedding GenAI capabilities, there are a much greater number that are still in the experimental phase despite investment, and much of what has been developed to date has been focused solely on back-office processes." Peddanagari emphasised, "Many banks, asset managers and insurers across the UK sit behind the curve, not only when it comes to GenAI integration but also regulatory readiness. It is now vital for firms to accelerate their plans on both fronts and ensure new and current staff are equipped with the right AI skills to help drive deeper adoption."

The survey also raised key ethical concerns in GenAI integration. Concerns such as transparency, privacy, quality of output, and fairness were highlighted. Only 14% of respondents have an AI ethics framework in place, with 45% in early development phases, and 23% yet to commence development.