We responded to the Treasury Committee's Call for Evidence on Artificial Intelligence (AI) in Financial Services. We support the aims of the inquiry and the work being undertaken by the Committee to ensure that the UK financial services industry can harness the transformative opportunities from AI, while mitigating any risks to financial stability and safeguarding customers. The financial services industry is at the forefront of AI adoption, and successfully harnessing these technologies is key to its future international competitiveness and contribution as an enabler of growth, innovation and climate adaptation across the UK economy.
In summary:
- Huge opportunities: For years, the financial services industry has used AI to improve operational efficiencies and deliver more effective and resilient services to its customers. The rise of generative AI has transformative potential for the industry, and firms are actively exploring, testing and adopting generative AI applications.
- Managing risks: A proportionate, predictable and agile regulatory environment is key to fostering AI adoption across financial services while managing the risks, such market concentration, third-party dependencies, AI-enhanced cyber threats and the ethical implications of AI on consumers.
- The right regulatory approach: The UK’s pro-innovation, sectoral approach to regulating AI is welcome and creates a strong foundation for enabling growth sectors to harness the full potential of these technologies in various contexts.
- Regulator and industry collaboration: An ongoing dialogue between regulators and industry is vital to address areas of existing regulations where integrating generative AI is complex or challenging.
- Coordination between regulators: Continued coordination between different regulators is vital to ensure a consistent regulatory approach to AI in financial services, avoid fragmentation of regulatory requirements, and facilitate a coherent approach to cross-sectoral and cross-border issues.