AI matters | Financial services round-up (June 2024)

Our Survey Says

There's quite a few surveys in the news at the moment. Those with an interest in AI in financial services may have taken note of the UK Financial Adviser Survey that Schroders undertakes regularly to explore the “issues, insights and strategic developments” relating to the financial adviser community, and two questions in particular:

(A) Do you think the development of AI technology applications such as ChatGPT represents an opportunity or threat to your business?

(B) How soon would you anticipate incorporating AI-based technology applications in your advice process in some way?

On (A), 76% of advisers surveyed saw AI as an opportunity rather than a threat. This represents an approx 30% increase in the percentage reported last year (57%). While this should not come as a surprise – AI whether so-called narrow or weak AI or generative AI presents a number of good use cases for the financial advisory market including AML processes, suitability reports and client care – it does mean that roughly a quarter of respondents still see AI as a threat. 

As for (B), the survey found that 85% of advisers expect to incorporate AI-based technology applications into their advice process in the future.

EU Commission keeps an eye on AI in the financial sector

On 14 June 2024, the EU Commission published a consultation on AI in the financial sector. The Commission, which is closely following the impact of AI on financial markets, is seeking stakeholder input on three sets of questions:

• General questions on the development of AI.
• Questions regarding specific use cases in finance.
• Questions regarding the application of the new EU AI Act to the financial sector.

The responses to these questions will help the Commission to understand the specific application and impact of AI in financial services. The Commission's approach is to ensure that the existing EU financial services legislative framework is implemented effectively rather than to seek to introduce new requirements. Responses are requested by 13 September 2024. Unusually the Commission has not committed to publishing the findings of the consultation – such a report depends on the progress made. 

In its announcement of the consultation, the Commission also noted that it will be holding a series of AI workshops led by DG FISMA and DG CNECT (which includes the AI Office), with support from the ESAs and national regulators. Registration for the workshops closes on 26 July 2024.

The centrality of AI to central banks

On 24 June 2024, the Bank for International Settlements (BIS) published a special chapter on the implications of AI for central banks, ahead of the publication of its Annual Economic Report 2024 on 30 June 2024. BIS underlines the direct impact that AI has on central banks in both their monetary and financial stability roles and emphasises the importance of central banks anticipating the effects of AI across the economy and exploiting the benefits of AI, and forming a “community of practice to share knowledge, data, best practices and AI tools."

An explainer by Hyun Song Shin, Economic Adviser and Head of Research at the BIS, discusses the key challenges (I've watched it and it doesn't appear to be a deepfake!).