• UK financial institutions are increasing their AI budgets, with investment in generative AI rising from 12% to 16% by 2025.
• AI is enhancing efficiency, with firms cutting KYC processing times by 90% and complaint handling by up to 50%.
• Risk management remains a priority, with firms implementing oversight teams, fact-checking systems, and data privacy measures.
• Regulators, including the FCA and BoE, are integrating AI supervision into existing frameworks, focusing on transparency and security.

Britain’s financial services sector is accelerating its adoption of generative artificial intelligence (AI), with institutions set to increase investment in the technology to 16% of their budgets by 2025, up from 12% this year.

According to new research from Accenture, the industry is moving beyond experimentation and integrating AI into key business functions, while maintaining strict risk controls. 

The joint study with UK Finance, Generative AI in Action: Opportunities & Risk Management in Financial Services, highlights how the sector is deploying AI in areas such as fraud detection, customer engagement, compliance, and operational efficiency.

Financial firms are taking a measured approach, leveraging AI’s capabilities while adapting risk management frameworks to address concerns about data privacy, security, and the reliability of AI-generated outputs.

The analysis features three detailed case studies showcasing AI’s potential. One financial institution reduced customer complaint handling times by 30-50% through AI-assisted case management, improving both customer experience and employee satisfaction. 

Another firm achieved a 90% reduction in Know Your Customer (KYC) processing times by using AI for document analysis within a secure cloud environment.

A third case study highlights AI’s role in software development, where a financial services firm used a multi-agent AI system to accelerate large-scale data migration, cutting development cycles by more than 50%.

These examples demonstrate how AI is already delivering tangible value while helping firms navigate the complexities of digital transformation.

The research indicates that 38% of financial institutions have developed comprehensive AI roadmaps, incorporating multiple initiatives focused on feasibility, value, and risk management. However, while adoption is increasing, firms remain cautious.

“We are seeing examples of generative AI deployments driving real adoption and efficiencies,” said Peter Hairs, Managing Director of Financial Services at Accenture UK. “At the same time, firms are increasingly aware of the limitations, risks, and uncertainties.”

 The study categorizes AI risks into three primary areas: the reliability of AI-generated outputs, data security and privacy concerns, and third-party risks. To address these issues, firms are implementing automated fact-checking systems, data privacy filters, and continuous monitoring protocols.

Many organizations have also established central AI oversight teams to oversee governance and compliance.

As AI adoption grows, UK regulators are evolving their approach. The Financial Conduct Authority (FCA) and the Bank of England (BoE) have confirmed that AI will be supervised within existing regulatory frameworks, while the Information Commissioner’s Office is updating guidance on AI and data protection.

The BoE has specifically flagged challenges around model explainability and transparency, issues that financial institutions will need to navigate as AI becomes more embedded in their operations. 

Security concerns are also at the forefront of AI adoption. UK Finance’s findings show that firms are prioritizing limited data retention policies for sensitive information, enforcing strict access controls, and adhering to data minimization principles.

While challenges remain, the UK financial sector is steadily integrating AI into its operations, focusing on areas that enhance efficiency and reduce risk.

As firms refine their AI strategies, the industry is poised to unlock significant productivity gains, with Accenture estimating cost savings of £12.7bn in banking, £9.7bn in capital markets, and £3.4bn in insurance.