Call for Evidence
AI in financial services
AI is being deployed across various sectors within financial services, including retail banking, investment banking, insurance, and pensions. The purpose of this inquiry on “AI in financial services” is to explore how the UK financial services can take advantage of the opportunities in AI while mitigating any threats to financial stability and safeguarding financial consumers, particularly vulnerable consumers.
It is not necessary to answer every question in these terms of reference. You can choose one particular section if you prefer. The Committee will decide on particular areas of focus once it has received the written evidence.
We would welcome evidence on the following areas:
How is AI currently used in different sectors of financial services and how is this likely to change over the next ten years?
This may include:
- Are there particular areas of financial services that are adopting AI more quickly and at higher rates of penetration than others? Are Fintech firms better suited to adopting AI? What percentage of trading is driven by algorithms/artificial intelligence?
- Are financial services adopting AI at a faster rate than other sectors in the economy?
To what extent can AI improve productivity in financial services?
This may include:
- Where are the best use cases for AI? Which particular transactions may benefit from AI?
- What are the key barriers to adoption of AI in financial services?
- Are there areas where the financial services should be adopting GenAI with little or no risk?
- Are there likely to be job losses arising from AI in financial services and if so, where?
- Is the UK’s financial sector well-placed to take advantage of AI in financial services compared to other countries?
What are the risks to financial stability arising from AI and how can they be mitigated?
This may include:
- Does AI increase the risks relating to cybersecurity?
- What are the risks around third-party dependencies, model complexity, and embedded or ‘hidden’ models?
- How significant are the risks of GenAI hallucination and herding behaviour?
- Are the risks of having AI tools used in the financial sector concentrated in the hands of a few large tech companies? To what extent do the AI financial market tools rely on social media outlets? E.g. trading algorithms using social media posts?
What are the benefits and risks to consumers arising from AI, particularly for vulnerable consumers?
This may include:
- What benefits to consumers might arise from using AI in financial services? for example, could AI be used to identify and provide greater assistance to vulnerable consumers?
- What is the risk of AI increasing embedded bias? Is AI likely to be more biased than humans?
- What data sharing would be needed to make AI more effective in financial services, and will there be a need for legislative change to achieve that?
- Are there any current or future concerns around data protection and AI in financial services?
- What sort of safeguards need to be in place to protect customer data and prevent bias?
How can Government and financial regulators strike the right balance between seizing the opportunities of AI but at the same time protecting consumers and mitigating against any threats to financial stability?
This may include:
- Are new regulations needed or do existing regulations need to be modified because of AI?
- Will Government and regulators need additional information, resources or expertise to help monitor, support and regulate, AI implementation in financial services?
The deadline for this submission period is 5pm on Monday 17 March.