TL;DR:
- 76% of top financial firms are considering or using AI/ML solutions.
- Only 6% are in large-scale adoption, while many are in early assessment.
- 94% plan to increase AI/ML use in the next three years.
- 87% are already using or evaluating large language models like ChatGPT.
- AI/ML applications mainly involve automation, not decision-making.
- Key barriers: lack of expertise and data availability, with risks including data compliance and bias.
- Only 15% discuss AI/ML plans with regulators.
Main AI News:
In the realm of financial services, the winds of change are unmistakably blowing, as revealed by a recent survey conducted by international law firm Norton Rose Fulbright. The survey, titled “The Power of AI: How is artificial intelligence transforming financing services?” paints a vivid picture of the industry’s evolving landscape.
A staggering 76% of top financial services firms, drawn from a diverse cross-section of clients worldwide, are actively contemplating or have already embraced the transformative potential of artificial intelligence (AI) and machine learning (ML) solutions. While a mere six percent are currently poised for large-scale AI/ML adoption, the majority are diligently exploring these cutting-edge tools, probing their applicability across various facets of their operations. Notably, a mere 24 percent confessed to abstaining entirely from AI/ML usage.
Looking ahead, an impressive 94 percent of respondents indicated their intention to either “definitely” (71 percent) or “potentially” (23 percent) increase their reliance on AI/ML solutions within the next three years. Additionally, an overwhelming 87 percent of participants either presently employ, have solidified plans to implement, or are actively assessing the utilization of large language models (LLMs) like ChatGPT or LaMDA.
Diving into the specifics, the survey uncovers a diverse array of applications for AI/ML within the financial services sector, with automation emerging as a prevailing theme. Tasks such as document generation and IT security are prime examples of the areas currently benefitting from AI-driven automation. However, it’s worth noting that the majority of these implementations focus on enhancing processes rather than usurping human decision-making.
Yet, this journey towards AI/ML integration is not without its challenges. Among the hurdles identified by surveyed financial institutions, a lack of expertise (23 percent) stands as a significant obstacle. Additionally, concerns regarding data availability and usage rights (19 percent) weigh heavily on the minds of industry players. In terms of risks, top concerns include issues related to training data and data protection compliance (28 percent) and the potential for biased outcomes (24 percent).
Marcus Evans, Partner at Norton Rose Fulbright LLP, commented on the importance of adequate training data, stating, “The efficacy of machine learning models depends on access to sufficient amounts of training data. This can be a challenge to source internally or externally. Synthetic data sources and extensive training in the system might be required. It is therefore no surprise that 19 percent of financial services firms responding to our survey take the view that data limitations are a key barrier for adoption.“
Interestingly, while the wheels are undoubtedly in motion, only 15 percent of respondents are actively engaged in discussions with regulators about their AI/ML adoption plans. Hannah Meakin, Partner at Norton Rose Fulbright LLP, emphasized the significance of governance in this context, noting, “Robust governance is likely to be one of the key means through which firms can give the regulator comfort about their evolving use of AI.”
Conclusion:
The financial services sector is at a pivotal juncture, with AI and ML poised to redefine its modus operandi. Norton Rose Fulbright, with its global team of seasoned legal and regulatory professionals, remains at the forefront, assisting leading financial institutions and FinTechs in navigating the complex legal, regulatory, and commercial terrain shaped by technological advancements. As AI continues to evolve, the industry stands ready to embrace the transformative potential it offers while treading carefully through the challenges it presents.
