London races ahead of the rest of the UK in effective AI adoption

The AI boom in London and the southeast shows no signs of abating, with seven-in-ten firms saying the technology's bringing higher revenue and profitability.

In London, the majority (83%) of businesses using AI report greater efficiency and 81% stronger innovation, according to research by NatWest. While in the south east, 83% report efficiency gains, three-quarters cite increased innovation and around two-thirds say AI is supporting stronger commercial performance.

"London and the southeast are already seeing the benefits of AI, with businesses reporting stronger productivity, innovation and growth," said Catherine van Weenen, chair of the London and South East Board at NatWest.

"For a region with strengths in sectors such as professional services, financial services and technology, the opportunity is significant."

A large part of the reason for the region's success, said NatWest, is its strengths in sectors such as financial services, professional services, technology, life sciences and other knowledge-intensive industries, where AI has the potential to improve productivity, enhance customer experiences and accelerate innovation.

However, the researchers said there are still big gains to be made. Across the UK, 44% of businesses already use AI, with a further 41% planning to adopt it within five years. However, just 6% of current business users have reached the stage where AI is transforming how their organization operates.

This conclusion aligns with research from AWS earlier this year, which found that 64% of organizations are now using the technology, with 68% reporting marked productivity gains.

However, it warned, most organizations use the technology to speed up simple activities, such as summarizing documents or answering queries with chatbots. Just 24% of adopters have reached an advanced stage, with AI forming a part of core processes and decision-making.

Human factors, said NatWest, remain key, with the firm's customers calling for greater transparency and human accountability in the AI era. More than eight-in-ten said the ability to reach a real person when needed is the most important trust factor, while 77% value reliability, human oversight and transparency around data use.

"While many businesses are experimenting with AI, relatively few have embedded it across their operations," said van Weenen.

"Realizing that opportunity will require people to remain at the heart of how AI is adopted. Trust matters. Businesses want the benefits of AI, but they also want human expertise, oversight and transparency."

However, geographical region isn't the biggest factor in AI adoption, accounting for just 8% of the variation in AI use, compared with 39% for headcount and 24% for turnover.

More important is business size, with firms with more than 100 employees nearly twice as likely to use AI as smaller businesses, at 67% compared with 36%.

"The opportunity from AI is not confined to the UK’s major technology centers," said NatWest chief economist Seb Burnside.

He added: "With size and scale a much stronger predictor of AI adoption, the regional growth story will be shaped less by where a business is based and more by the conditions around it – its access to skills and expertise, the confidence of its leaders and the strength of its local industrial base."