The Impact of Artificial Intelligence on Financial Services Evidence from the United Kingdom Financial Sector
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This study examines how artificial intelligence is changing financial services, using the 2024 Bank of England and Financial Conduct Authority survey as the main empirical source. The survey received responses from 118 regulated firms across banking, insurance, non-bank lending, investment and capital markets, and financial market infrastructure. The analysis compares adoption indicators from 2022 and 2024 and evaluates deployment, automation, governance, expected benefits, and perceived risks. The proportion of firms already using AI increased from 58% in 2022 to 75% in 2024, a rise of 17 percentage points or 29.3%. The share of AI use cases supplied by third parties almost doubled from 17% to 33%. Firms expected the median number of use cases to increase from 9 to 21 within three years, representing projected growth of 133.3%. AI was concentrated in internal process optimisation, cybersecurity, fraud detection, data analysis, and customer support. Although 55% of use cases included some automated decision-making, only 2% were fully autonomous. Governance practices were common: 84% of firms had an accountable person for the AI framework and 81% used explainability methods. At the same time, 46% reported only partial understanding of the AI technologies they used, compared with 34% reporting complete understanding. The evidence indicates that AI is already producing broad operational and analytical effects, but its financial impact remains mostly assistive rather than fully autonomous. Data privacy, model risk, cyber threats, bias, and third-party concentration require continued human oversight. The study concludes that AI can improve efficiency, risk detection, personalisation, and access, but sustainable value depends on governance, transparency, data quality, and accountability.
Keywords
Artificial Intelligence, Automation, Banking, Financial Regulation, Financial Services, Machine Learning, Model Risk