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The Actuary The magazine of the Institute & Faculty of Actuaries

Financial services companies expect mass AI adoption

Nearly two-thirds of executives at financial services companies expect to be mass adopters of artificial intelligence (AI) within two years, compared with less than a fifth today.

AI impacting financial services at "accelerating pace" ©iStock
AI impacting financial services at "accelerating pace" ©iStock

That is according to a survey of 150 executives by the World Economic Forum (WEF), which predicts a significant gap between firms that adopt AI quickly and those that don’t.

However, the findings show that three in five financial services companies currently invest less than 10% of their research and development resources on AI.

This could be hindering returns, with the researchers suggesting that payoffs are especially strong when investment levels are between 10% and 30% and over 40%.

The firms that expect to become mass AI adopters intend to use the technology for revenue generation, process automation, risk management, customer service and client acquisition.

“The comprehensive and global study confirms that AI is affecting the financial system at an accelerating pace,” says Matthew Blake, WEF's head of financial and monetary systems.

“With the rising trend of mass adoption of the technologies throughout financial services, those firms that implement AI quickly look set to sprint ahead.”

The survey also revealed executive fears surrounding AI bias and market-wide risks, with over half of executives expecting mass AI adoption to worsen discrimination within the sector.

However, 70% said they are at least somewhat prepared to mitigate AI bias risks. Companies using risk and compliance teams in AI implementation were most confident.

FinTech firms were found to be more likely to create AI-based products and services, employ autonomous decision-making systems and rely on cloud-based offerings.

Meanwhile, traditional financial services players predominantly focus on harnessing AI to improve existing products.

Bryan Zhang, executive director of the Cambridge Centre for Alternative Finance, which co-produced the research, said: "This empirical research underscores the growing importance of harnessing AI in financial services, which gives new impetus for firms to develop a holistic and future-proof AI strategy."

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