93% of Financial Services Firms Call for Stricter Regulations for Generative AI

Financial services firms are proactively seeking regulatory frameworks to provide a clear roadmap for ethical and secure generative AI applications.

93 per cent of senior decision makers believe the UK Government should introduce stricter regulations for Generative AI, according to research from the Gillmore Centre for Financial Technology at Warwick Business School.

More than three-quarters (77 per cent) say they are not happy with the Prime Minister’s approach to Gen AI, and 85 per cent have admitted to worrying about the security risks posed by Gen AI.

The report, titled In the AI of the storm: How UK financial services firms are using AI, polled via independent polling agency Censuswide, surveyed 250 senior decision makers at UK financial institutions and banks to measure how they felt about the current state of AI and its widespread use.

89 per cent believe Gen AI helps financial criminals exploit organisations even more, and 29 per cent of organisations have even taken the step of banning the use of AI – 11 per cent implementing a full ban, 18 per cent a partial ban, and 37 per cent considering some form of ban.

This comes after the Global AI Safety Summit at Bletchley Park, where Rishi Sunak   and global industry leaders explored the safe development of AI and its regulations.

84 per cent of bosses have set up a sandbox environment to experiment with Gen AI applications within their organisation, but a significant amount (90 per cent) feel that academic research is necessary for them to trust Gen AI.

Financial services firms, dealing with sensitive data and complex transactions, emphasize the need for regulations to mitigate the risks of misuse and ensure responsible AI practices. Stricter guidelines are seen as essential to maintaining the integrity of financial systems, protecting customer information, and preventing potential malicious uses of generative AI in areas such as fraud or manipulation.

Ram Gopal, Director of the Gillmore Centre for Financial Technology, said:

“It is understandable that there is some hesitancy around the adoption of Generative AI, but it can facilitate much knowledge sharing and be creative in the way it pulls together and integrates ideas, with the potential to revolutionise the way we work and live.”

“University research centres can play a significant role in the experimentation of and input on AI and its development, offering robustly tried-and-tested outcomes for everyone. In collaboration with other tech leaders and governments, we must make sure that AI’s regulation balances putting safety first without impinging on innovation and forcing firms to put innovations on the back burner.

“Much of AI’s capabilities are yet to be seen, meaning a plethora of unprecedented benefits are still to be unlocked, and its risks need to be carefully monitored.”

On a more positive note, 93 per cent of senior decision makers believe Gen AI is going to revolutionise the fintech and financial services sector, and a further 91 per cent are convinced it will play a vital role in financial democratisation.

The call for stricter regulations in generative AI by financial services firms underscores the growing concerns about the potential risks associated with artificial intelligence in the financial sector. As generative AI becomes more sophisticated, there's a recognition that it could pose challenges related to security, accountability, and ethical use.