Banking professionals fear AI regulatory burden

More than three quarters (84 per cent) of banking professionals fear the regulatory and liability issues that could arise as artificial intelligence (AI) becomes increasingly mainstream in the financial services industry.

A survey of more than 600 banking professionals carried out by MoneyLIVE also found that three quarters believe that banks will struggle to recruit staff with the necessary expertise as use of AI usage intensifies.

Despite some banks exploring the use of AI in new robo-advisory and wealth management products, such as HSBC’s My Investment service, the survey found that 61 per cent were concerned over being able to show an audit trail representing a significant constraint on using AI for financial advice.

Almost a quarter (24 per cent) of those surveyed said their organisation had no immediate plans to deploy AI in robo-advisory tools, while 25 per cent said they used it to a moderate extent, 15 per cent said they expected to start such a service within the next two years, 22 per cent said they were in pilots only and just 14 per cent said they were currently using it to a “massive extent”.

More than half (52 per cent) said the senior management in their organisation was very concerned about the liability issues surrounding AI. Inaccurate or incomplete use of data by an algorithm or automated system also proved to be a concern, with 75 per cent saying they were worried about inaccurate data leading to negative customer outcomes.

Recent analysis by Gartner showed that the growth of AI will plug the current gap in data science skills, predicting that by 2020 more than 40 per cent of data science tasks will themselves be automated.

As the capabilities of AI grow at rapid pace, banking professionals said their companies face significant challenges when it comes to building AI-powered journeys, with 69 per cent saying that poor data management practices were a barrier to the uptake of AI within their organisation, in addition to the challenge of finding talent to fuel the shift to AI.

The report’s authors expressed concern about the extent to which banks view their current use of AI as “sophisticated” compared to the technologies now available: just seven per cent said they considered their AI high sophisticated, whereas 50 per cent said moderately sophisticated and 43 per cent said their current AI was “not very sophisticated”.

The report read: “AI-powered value-added services are already on the way to becoming mainstream practice in an industry seeking to build new value chains: almost half our surveyed bankers are using AI to offer value-added services to customers and a further 18 per cent have a pilot underway.

“Incumbents need to step into this space if they are to compete effectively. Delivering best-in-class personalised financial and investment advice at scale would be economically impossible using human advisors but can be achieved by AI.”

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