European financial leaders bracing for impact of AI

EY’s European Financial Services AI survey found that 77% of respondents are bracing for a significant impact to their workforce and operations.

The survey, which took place in October 2023, canvassed the views of executives from 60 European financial institutions – including listed firms representing an aggregate market cap of £507.7bn, including the views of administrators, lawyers and wealth managers from the Channel Islands.

The survey found that two-thirds (68%) of respondents anticipate that up to a quarter of all roles will require AI training or upskilling over the next year, with 17% believing it could be as much as half.

‘It was evident from our discussions with local businesses when conducting the survey that firms are at different stages of their thinking and implementation of Generative AI,’ said Leo Boessenkool, pictured, partner and leader of EY’s CI Technology Risk team.

‘However, all understood that AI cannot be a “bolt-on strategy”, but rather a fully integrated component of their firms’ strategies. Much of the work that has been done in the Channel Islands has been driven by leaders who are passionate about embracing the value that it can bring their clients and their people. The survey’s results highlighted that they must also hone their passion for innovation into actively planning for training and upskilling their workforce in AI technologies and establishing robust governance frameworks to mitigate potential risks.’

However, action to realise productivity gains and workforce development through training and upskilling remains limited. More than a third of respondents (35%) said they currently have no plans in place to train their workforce in new and rapidly evolving GenAI technologies, while a further 42% described their plans as being ‘in their infancy’.

Gen AI is also expected to change the face of graduate and entry-level roles, with 60% of executives surveyed anticipating new technologies to have a significant impact on the roles and tasks undertaken by those joining the workforce. To manage the impact, 35% of executives said they plan to integrate AI training within their graduate programme, while 25% are planning a more widespread restructuring of roles and responsibilities across entry-level positions. Another 28%, however, said they have not taken any action to offset potential knock-on impacts.

When asked to consider the top attributes that firms will seek as they recruit entry- level talent for a GenAI-enabled workforce, the traits most cited by European financial services leaders were an innovative and interdisciplinary mindset, followed by being tech savvy and experimental.

The area of expertise most in demand from skilled talent, specifically in reference to AI integration over the next two years, is data science and innovation (the top choice for 45% of executive respondents), followed by information and technology (24%) and operations (14%).

Top concerns about GenAI are AI knowledge, future regulation, and ethics. Concerns around the ethics of GenAI are centred on privacy (cited by 32% of all respondents), followed by transparency and explainability (23%), and the potential for discrimination, bias, and lack of fairness (23%). To manage potential ethical implications arising from GenAI integration, nearly a fifth (18%) of respondents claimed they have already put an AI ethics framework in place, with a further 30% in the early stages of development. However, approaching half (45%) of respondents stated their firm is yet to develop an AI ethics framework.

In terms of accountability, 50% of respondents reported that their firm’s technology team will be responsible for the integration of AI across the business, reporting to the chief information officer (or equivalent position). Nearly four in 10 (38%) respondents said their firm remains in the process of defining lines of accountability.