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AI Investment doubles among UK Financial Institutions in just 1 year

By Gloria Methri

October 03, 2024

  • Advanced AI
  • AI Banking
  • Banking Modernisation
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  • artificial intelligence, AI, Digital Banking, Banking Modernization, FinTech, UKAlmost two-thirds (63%) of financial institutions are now investing in AI, compared to just 32% in 2023
  • Four in five (81%) of financial institutions view AI as a business opportunity, a sharp increase from 56% in 2023.
  • Banks are already seeing the benefits of AI, including improved productivity and greater insight into customers.

The number of UK financial institutions investing in artificial intelligence (AI) has doubled within a year, according to Lloyds Bank’s ninth annual Financial Institutions Sentiment Survey.  Almost two-thirds (63%) of respondents are investing in emerging technology, up from one-third (32%) in 2023.

The survey, which gathered insights from over 100 senior decision-makers at banks, wealth and asset managers, insurers, and financial sponsors, reveals a significant shift in the UK financial sector’s approach to AI. It highlights the importance of this technology, with 81% of financial institutions stating they view it as a business opportunity, a significant rise from 56% in 2023.

The report shows that nearly half (46%) of financial institutions have established dedicated teams to explore AI use cases, while two-fifths (39%) have partnered with firms possessing AI capabilities. Additionally, 15% have already collaborated with firms specialising in AI.

When examining the opportunities, AI provides financial institutions, and whether benefits are already being felt, three key areas emerged from the survey. These were:

  • Improved productivity: 62% see it as an opportunity, while 32% are already seeing the benefit
  • Competitive advantage: 61% see it as an opportunity, while 22% are already seeing the benefit
  • Greater insight on customers: 69% see it as an opportunity, while 18% are already seeing the benefit

While many institutions are still waiting to see significant gains in other areas, such as business growth and client experience, over two-thirds (69%) express confidence in their ability to implement AI effectively and leverage its full potential.

Lisa Francis, Head of Institutional Coverage, Lloyds Bank Corporate & Institutional Banking, said, “This year’s survey highlights a significant boost in AI investment among UK financial institutions, reflecting its elevation to a board-level priority. The focus has shifted from merely exploring artificial intelligence to making practical investments and applications. As a result, many institutions are already experiencing the benefits, such as enhanced productivity, deeper customer insights, and a stronger competitive edge. While the full impact across all business areas is yet to be realised, this will evolve as institutions continue to innovate, test and learn.”

Rohit Dhawan, Director of AI and Advanced Analytics at Lloyds Banking Group, said, “Artificial intelligence is rapidly reshaping the financial landscape, and what we are seeing is just the beginning. Growing investments from financial institutions and increasing partnerships in AI demonstrate a clear commitment to leveraging this technology. From automating complex processes to unlocking insights that improve decision-making, AI is enabling institutions to reimagine what’s possible. We are witnessing an exciting period of transformation, and it is inspiring to consider the advancements that lie ahead for the sector.”

As UK financial institutions continue to embrace AI, the sector is poised for a technological evolution that promises to redefine traditional banking practices and enhance overall efficiency.

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