UK banks are bullish on AI integration, but no clear investment returns are visible

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Nearly three-quarters of UK banks are piloting the use of generative AI,  but don't expect to see their investment pay off any time soon.

Around 70% of institutions surveyed by banking trade association UK Finance said they were using ‘copilot’ type AI efficiency tools, while nine-in-ten already use predictive AI for functions such as fraud detection and risk analysis.

Three-quarters believe they will benefit from generative AI. However, the biggest opportunities will be in productivity improvement and operational effectiveness, rather than customer-facing, revenue-related, use cases.

"Generative AI is a new horizon for financial services, with clear opportunities for firms, from boosting productivity and growth, to improving the experience for customers," said Jana Mackintosh, managing director of payments, innovation and resilience at UK Finance.

Marsh McLennan, for example, says its LenAI generative AI assistant was used by 15,000 staff within 30 days of launch, of whom 94% said it improved their productivity and efficiency.

The main uses were writing and improving communication (70%), searching for answers to specific questions (68%) and summarizing documents (56%).

However, in introducing generative AI, financial institutions are taking the long view, with return on investment expected to take between three and five years for the more advanced use cases.

Although there’s potential for generative AI to boost revenue, companies are wary about its short-to-medium-term monetization prospects, and organizations expressed uncertainty about how much money and attention they should be spending on the technology.

Only 13% said they believe revenue opportunities will be in the top three expected benefits.

Achieving a return on investment, the report said, will depend on data quality and seamless integration into existing systems, a process which could take three to five years.

"The business case for generative AI is still uncertain," the report concluded.

AI risks a key concern for banks

Firms were also concerned about the risks of AI, with 95% stating they're already accounting for AI risks in their control frameworks. Similarly, nearly one-third (60%) have already taken action to prepare for the risks of generative AI.


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Transform technology risk into advantage


"The sector has been using predictive AI for years, and firms have enhanced their risk management processes to make sure the technology only ever adds to their accuracy, security and offering for customers," Mackintosh said.

"And the majority are already upgrading these processes to lock down the risks from generative AI."

Meanwhile, four out of five companies said they want to see greater collaboration with regulators to highlight best practices in AI and create an internationally aligned regulatory system.

"What firms want now is to collaborate with policy makers and regulators on a long-term, flexible approach to regulation that can keep pace with technological change, ensuring our financial services sector can guard against any risks from this technology, while safely seizing its great competitive advantages," Mackintosh said.

Emma Woollacott

Emma Woollacott is a freelance journalist writing for publications including the BBC, Private Eye, Forbes, Raconteur and specialist technology titles.