How Europe’s FS leaders are approaching generative AI adoption

But executives from across banking, insurance and wealth and asset management firms also highlight the complex, multidimensional challenges that the sector is already navigating through AI adoption – of maximizing human capital and experience, enhancing business efficiency and mitigating emerging risks.

In managing the next phase of AI adoption, leaders must adopt a strategic mindset. AI must not be a “bolt-on” strategy, siloed from the wider goals and objectives of the business. To enable responsible innovation and value creation, which supports the development of people driving the future of financial services across Europe, AI needs to be a fully integrated component of firms’ strategy.

Advancing the artificial intelligence opportunity

European financial services leaders’ sense of optimism and confidence in the future of GenAI adoption is clear; 63% are excited about what the acceleration of systems, applications and models could mean for their business.

For many firms, the rise of GenAI creates the potential to augment existing AI use cases, whether that’s better understanding and communicating with customers, automating background tasks or personalizing engagement.

Among European banks, insurers and wealth and asset managers, use of AI is most prominent in fields of data science, operations, IT, marketing and sales, and customer support.

In an intensely competitive sector, leaders are gauging progress relative to their peers; over half perceive their firms to be on a par with competitors, while under a quarter believe their firm is behind the curve.

In a year’s time, almost half (47%) of leaders want to have established GenAI capabilities across a wider range of use cases. Just over a fifth are aiming to experiment with GenAI adoption to inform a longer-term plan; another fifth plan to rapidly accelerate their GenAI adoption to move ahead of peers.

We expect the pace of change to continue to challenge firms’ ability to adapt and respond. The rate and efficacy of firms’ AI adoption will become an increasingly important competitive edge.

With spending on GenAI technologies already widespread – 60% of firms have actively invested in the past year – it is the strategic execution of AI adoption and programs which will differentiate leaders in the sector. In the near term, competition looks set to continue, with 75% of executives planning to increase capital allocation over the year ahead.

Realizing the potential of AI to enhance productivity

Europe’s financial sector leaders are targeting increased productivity, customer benefits and operational efficiencies through their investment in GenAI, but realizing and capitalizing on potential gains requires in-depth, long-term planning. This is not yet in full force across the sector.

More than three-quarters (77%) of financial services leaders across Europe expect GenAI technologies to deliver a windfall to productivity and are bracing for a significant impact to their workforce and operations. The potential of AI is huge and opens up new avenues for growth.

Two-thirds (68%) of respondents anticipate that up to a quarter of all roles will require AI training or upskilling over the next year; nearly a fifth (17%) believe it could be as much as half. Action to support productivity gains through training and upskilling is not yet widespread, however. More than a third of respondents (35%) have no plans in place to train their workforce in GenAI technologies, while a further 42% described their plans as being “in their infancy”. Taking a more focused approach, seven have put training in place for targeted groups, with a further six reporting developed plans.

It is crucial that firms actively consider the ways in which AI and GenAI technologies that can radically increase automation and big data handling may change both the nature of work, and the ways in which people learn and build experience throughout their career.

Adapting for AI-enabled early careers

Europe’s financial services sector leaders are considering the potential impacts of AI adoption on the next generation of talent joining their organization.

Over half (60%) of executives expect new technologies to have a significant impact on the roles and tasks undertaken in entry level or graduate roles. To manage the impact, 35% of firms plan to integrate AI training within their graduate program, while a quarter (25%) will undertake a more widespread restructuring of roles and responsibilities across entry level positions.

By removing repetitive tasks and increasing non-human resourcing, AI can streamline administration, increase the rate of execution and build capacity across a team – creating opportunity to improve employee experience and drive engagement. It is encouraging to see forward planning and development of graduate schemes already in place across Europe’s financial services sector firms. It is this long-term mindset that will support the most effective integration of technology; ultimately, it’s not about what technologies can deliver but how they are applied and what they enable people to achieve.

Assessing opportunities to integrate GenAI technologies as part of firms’ talent strategy can also help build a holistic picture of the structure of roles, skills gaps and training opportunities across their workforce.

Looking to the future and considering the attributes most valuable in a GenAI-enabled workforce, Europe’s financial services sector leaders want to attract candidates with innovative and interdisciplinary mindsets, who are “tech savvy” and experimental. Among experienced talent, financial services sector leaders expect data science and innovation, information and technology and operational skills to be most in demand as AI adoption accelerates over the next two years.

Harnessing the benefits of AI for all stakeholders

The Turing Institute’s 2021 report, AI in Financial Services1 , emphasized the need for responsible innovation across machine learning, non-traditional data and automation – a need that will only increase as the use cases of GenAI evolve.

Leaders’ most prominent areas of concern around AI and GenAI adoption – knowledge and skills gaps, the impact on their people, regulatory change and the ethical implications of AI – evidence their commitment to the responsible deployment of new technologies.

Leaders’ concerns around the ethics of GenAI center on privacy, transparency and explicability, alongside the potential for discrimination, bias, and lack of fairness.

To counter these risks, some firms are on the front foot; nearly a fifth (18%) have already put an AI ethics framework in place, while 30% are in the early stages of development.

Defining accountability is critical to ensuring that AI adoption is fully integrated as part of a sustainable business strategy. While half (50%) of FS firms’ technology teams will be responsible for the integration of AI across the business, reporting to the chief information or chief digital officer, nearly four in 10 firms (38%) are yet to determine lines of accountability.

Establishing exactly how organizations are going to approach, develop and integrate new capabilities across operations is a critical first step to mitigating risks. By ensuring that robust governance frameworks are in place, financial services firms can build confidence in their ability to harness the benefits of AI and GenAI technologies, both for customers and their people.