AI could revolutionize financial services, says new report

The global financial services industry will see continued growth in the usage of artificial intelligence and machine learning with the potential for revolution.

A recent report from the Institute of International Finance and EY drew on responses from 65 financial institutions form nine regions across the world and found that the scope of AI/ML usage has grown in the past year.

“This year has been an inflection point in the development and deployment of AI across all industries. While financial services firms have employed and managed AI for years, generative AI and Large Language Models have changed the landscape,” said Jessica Renier, Managing Director of Digital Finance at IIF. “This year’s survey results underscore that financial institutions are moving forward in AI with a strong focus on governance, ethics, controls and regulatory engagement.”

The survey found that 86% of respondents expect a significant or moderate increase in their model inventory due to generative AI adoption.

In the near term, uses include risk identification and assessment, code assistance, document querying and extraction, and financial crime/anti-money laundering and 37% of respondents described the potential impacts of generative AI techniques as “revolutionary” on their business, indicating they see significant expansion in use cases ahead.

The important role that the technology will have in oversight and ethics is reflected in the 66% of respondents reporting a C-suite manager either currently or imminently responsible for AI/ML ethics and governance, including half of the Canadian participants.

Most respondents expect increasing reliance on third-party AI/ML models over the next year with 87% requiring third-party models to have the same level of validation as required for internally developed models. However, many highlight the challenge of obtaining requisite information to perform that same level of validation.

“With the emergence of GenAI, the use of AI/ML has never been more prominent in financial services. The 2023 survey performed by the IIF and EY demonstrates just how impactful AI has been (with continued expected growth), as well as the steps institutions are taking to make sure their adoption of AI/ML is safe and responsible,” said Jan Bellens, EY Global Banking and Capital Markets Sector Leader.