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New findings from EY reveal that 26 per cent of financial services firms lack sufficient controls to ensure their AI systems adhere to existing laws and regulations. Additionally, nearly a quarter have inadequate measures to prevent unauthorised access or corruption of their AI systems.
The integration of artificial intelligence (AI) across financial services is accelerating, with over half of firms intending to increase their AI investments in the next year. Despite these plans for expansion, there remain significant discrepancies in governance.
Currently, nearly 60 per cent of these firms utilise AI to automate routine tasks, and 62 per cent aim to simplify complex processes that traditionally require specialised skills.
Preetham Peddanagari, EY’s UK Financial Services Tech Consulting Leader, emphasises the importance of oversight, warning of the threats posed by inadequate governance frameworks.
Furthermore, Anssi Ruokonen, Head of Data and AI at Basware, stated the necessity for data quality and management in AI's effectiveness. The "AI to ROI" report by Basware shows that 94 per cent of finance leaders actively use AI for operational efficiency, and improve compliance by 73 per cent.
In contrast, without precise data management and strategy, organisations risk compliance issues, inefficiency, and stunted growth.
Greg Watson, CEO of Napier AI, highlighted vulnerabilities within the industry due to inadequate AI controls in financial services. As AI adoption progresses, many institutions are deploying AI broadly, yet lack required safety and accountability mechanisms. This situation threatens customer trust and exposes institutions to potential breaches and failures.
Napier AI's AML Index 2024-2025 indicates that financial crime compliance cost UK firms over £6.2 billion in 2023, while AI-driven solutions could potentially save £2.2 billion annually.
The Financial Conduct Authority (FCA) has decided against introducing new AI regulations, opting to monitor risks through its existing frameworks. Nonetheless, it has launched a "supercharged" AI sandbox in collaboration with Nvidia to aid safe innovation in the sector. This move aligns with increased investment, with banks aiming to invest £ 1.8 billion into AI by 2030.
