European Financial Services Lag in GenAI Adoption Due to Skills and Regulatory Challenges

LONDON, 4 December 2024 – European financial institutions face significant ​obstacles in the ​adoption ​of the General Artificial Intelligence (GenAI), mainly due to labour shortages and insufficient policy preparation. According to ​a recent ​Ernst & Young (EY) survey, 90% ​of these companies ​have incorporated some ​form of CEW into their operations, but only 9% are considered competitors in this ​area.

Investment testing in the ​Hurdles application

The EY survey, which covers 106 European financial institutions with a combined market capitalization of €880 million, ​shows that 72% of companies plan to increase ​their ​investment in GenAI over the next 12 ​months. However, 78% of respondents recognize that their workforce does not have ​sufficient experience with ​technology. In particular, only 25 per cent have training programmes in place to ​fill this skills gap, 43 per cent of which are still in ​the planning ​phase and 29 per cent have no ​training ​initiatives.

Concern ​about regulatory clarity

While the European Union is preparing to implement the Access to Information Act, which will regulate access to information systems according to their level of risk, only 11% ​of the institutions surveyed state that they are prepared to adopt new regulations. In addition, 15% work without an IA risk framework, and 70% admit to only partially preparing. This regulatory uncertainty is a major concern, with 38% of businesses citing it as a major challenge, compared to 29% ​in 2023.

Ethical and ​operational problems

Companies also face ethical problems related to the adoption of GenAI. Transparency and ​accountability are crucial, with 68% ​of managers ​highlighting these ethical considerations. Privacy concerns follow closely, cited by 55% of respondents. Despite ​these problems, only 14% of companies have established an ethical framework for AI and 31% are in ​the early stages of development.

Impact ​on labour force dynamics

The integration of the General Expert Initiative is expected to have a significant impact on employment in the financial services sector. Approximately 66% ​of executives ​expect up to a quarter of current positions to be assigned in the ​coming year, ​with 93% indicating that up ​to 10% of positions could be redundant. Despite this, ​only 24% of companies plan to restructure ​junior positions, and only 25% intend to integrate AI ​training into their graduate programs, compared to 35% in ​2023.

Strategic challenges for the ​future

Omar Ali, EY’s global financial services leader, stresses the importance of a ​strategic approach to the adoption of GenAI:

“AIGen remains a priority for financial services management teams, promising new levels of well-known ​productivity ​growth. There is little ​doubt in the sector that the use of the IA ​- and more and ​more of the ​IA – is changing the game, but ​the implementation of a changing technology, in the budget, in the appetite for risk and in ​the workforce as a whole, is extremely complex and difficult

To ​address these complexities, companies must prioritize the training of their workforce ​and ​establish sound regulatory ​and ethical frameworks to fully exploit GenAI’s potential.

In conclusion, while European financial ​services companies recognize the transformation ​potential of ICMs, the main challenges related to skills ​development and compliance make it difficult to adopt them further. It is essential to address these problems for companies ​that aim to maintain their competitiveness and to take full advantage ​of the benefits of GenAI technologies.