EY, the accounting firm, has published its second ‘European Financial Services AI’ survey, revealing that only nine per cent of respondents think they are ahead of the artificial intelligence (AI) and generative AI (GenAI) curve.
The report had responses from over 100 firms across the European financial market (with an aggregate market cap of almost €880billion). The importance and impact that AI will have on the industry has been recognised by executives, however, only 11 per cent are prepared for incoming regulation. Furthermore, despite 28 per cent saying they have accelerated AI adoption over the last year, 78 per cent said their workforce only has some, limited or no experience with the newest GenAI-related technologies.
When it comes to amending this, only 25 per cent of firms have established new training and upskilling programmes. Meanwhile, 60 per cent remain in the planning phase.
Omar Ali, EY Global financial services leader comments: “GenAI continues to sit high on the agenda for financial services leadership teams, promising well-acknowledged new levels of productivity gain. There is little doubt within the sector that harnessing AI – and increasingly GenAI – is game-changing, but the implementation of an evolving technology, to budget, within risk appetite and across an entire workforce, is hugely complex and challenging.
“Whilst some firms have made huge leaps in adopting AI and have seen real benefits, many are struggling to keep pace.
“GenAI is developing faster than many other technological innovations of recent times, and demands new, progressive skill sets. The firms that ramp up regulatory preparations, build an appropriate risk and control framework, and roll out essential new training and upskilling programmes across their whole workforce – not just to the technical few – will be setting themselves apart from the competition.”
The impact of AI
According to 66 per cent of respondents, up to a quarter of the European financial services sector could be impacted by AI’s integration. In fact, over nine in 10 (93 per cent) of executives believe up to 10 per cent of roles could become redundant.
Despite this, only a quarter (25 per cent) report their firm has an established training programme in place. Forty-three per cent say plans are still in their infancy, and 29 per cent confirm they currently have no training programmes in place. Of these, 12 per cent say they have no plans to develop one.
New job application: you vs AI
Entry-level positions are expected to be particularly impacted. Fifty-nine per cent of leaders believe AI technologies will have a significant or even transformative impact on the roles and tasks undertaken by those joining the workforce.
However, only 24 per cent of executives are planning to restructure entry-level roles and responsibilities, and just 25 per cent plan to integrate AI training within their graduate programme (down from 35 per cent in 2023). Thirty-five per cent say they have not taken any action to offset any potential knock-on impacts of AI adoption to the junior workforce (up from 28 per cent in 2023).
AI in demand
For the second year running, the business area that has the highest demand for AI talent is data science and innovation (the top choice for 54 per cent of respondents). The second and third-ranking areas have switched places this year. In second is back-office operations (46 per cent of respondents, up from 14 per cent in 2023), followed by information technology (40 per cent of respondents in 2024, up from 24 per cent in 2023).
When asked to consider the top attributes that firms will seek as they recruit entry-level talent for an AI-enabled workforce, the top three cited by European financial services leaders were:
- the ability to adapt and flex (77 per cent)
- having an innovative and experimental mindset (70 per cent)
- the ability to collaborate and work outside their focus area (44 per cent)
This year, being tech-savvy did not rank as a top priority (34 per cent).
Emergence of GenAI
The survey data confirms that GenAI-driven investment remains central to European financial firms, with 72 per cent of executives planning to increase expenditure over the next six to 12 months. This is marginally lower than the 75 per cent of leaders in 2023 who said they would actively invest in GenAI in the year ahead.
The two biggest concerns according to executives when it comes to integrating GenAI remain the same as last year.
European finance leaders cite limited understanding and experience of GenAI applications and the impact across the workforce (56 per cent in 2024, up from 36 per cent in 2023), followed by uncertainty about existing and pending potential regulatory impacts (38 per cent in 2024, up from 29 per cent in 2023).
Ethical issues – which were ranked third in 2023 have fallen to eighth place, and leaders are now more concerned about the speed of evolution of GenAI progress compared to how fast they can integrate it into their business (35 per cent), followed by the cost of implementation and control frameworks (26 per cent).
In reference to the broader AI landscape, only 11 per cent of leaders stated that their firm is fully prepared for incoming regulation, while 70 per cent say their firm is only limited or partially prepared, and 15 per cent do not even have an AI regulatory risk framework in place.
Ethics in GenAI integration
On GenAI specifically, leaders continue to raise concerns about ethics. The top concern in 2024 for GenAI adoption is:
- the quality of output (56 per cent)
- transparency and explainability (54 per cent)
- privacy (53 per cent)
- the potential for discrimination, bias, and lack of fairness (47 per cent)
To manage potential ethical implications arising from GenAI integration, 14 per cent of respondents claimed they have already put an overall AI ethics framework in place, with a further 31 per cent in the early stages of development. However, a quarter (25 per cent) of respondents stated their firm is yet to develop an AI ethics framework, and 24 per cent said they have no plans to develop one.
Ayman Awada, EY EMEIA financial services banking technology and GenAI leader comments: “GenAI technologies are moving the goalposts of what is possible for financial services firms when it comes to operations and back-office processes.
“There is a small segment of the market that sits ahead of the curve by scaling AI capabilities at pace, but many firms are barely progressing from early-stage adoption and predominantly focus on the back-office. Despite investment, moving beyond the experimental stage has been slower than expected for Europe’s financial firms, and the benefits are often siloed within departments.
“Many banks, insurers and asset managers across Europe still have some way to go to reach the next level of AI-enablement. Raising the bar on regulatory readiness, and upskilling new and current staff to embrace GenAI now and in the future will be the key to unlocking deeper adoption.”
