Three quarters of financial services firms in the UK are already using artificial intelligence, yet nearly half of these users have only a "partial understanding" of the AI they are deploying, according to a Bank of England and FCA survey.
The survey of 118 firms from across the FS sector shows that 75% are already using AI, with a further 10% planning to do so over the next three years. This is up from 58% and 14% respectively in 2022.
A third of all AI use cases are third-party implementations, up from 17% 2022. This is contributing to a lack of understanding of the technologies being deployed: 46% report having only ‘partial understanding’ versus 34% of firms that say they have ‘complete understanding’.
Respondents report that 55% of all AI use cases have some degree of automated decision-making with 24% of those being semi-autonomous, involving human oversight for critical or ambiguous decisions. Only two per cent of use cases have fully autonomous decision-making.
Nearly two thirds of all AI use cases are rated low 'materiality' by the firms that use them with 16% rated high materiality.
Respondents say the biggest benefits of using AI are in data and analytical insights, anti-money laundering and combating fraud, and cybersecurity.
When it comes to risks, data privacy and protection, data quality, data security, and data bias and representativeness rate highly. The risks that are expected to increase the most over the next three years are third-party dependencies, model complexity, and embedded or ‘hidden’ models.
Finally, the largest perceived regulatory constraint to the use of AI is data protection and privacy followed by resilience, cybersecurity and third-party rules and the FCA’s Consumer Duty.