Over 90% of financial firms lack upskilling and regulatory preparedness in generative AI adoption

A new EY European Financial Services AI Survey suggests UK financial services firms are facing significant challenges in integrating Artificial Intelligence and Generative AI technologies.

Despite AI adoption efforts, many firms remain in the early stages of implementation, hindered by gaps in workforce upskilling and regulatory readiness.

Only 9 per cent of firm’s report being prepared for upcoming AI regulations, with 27% having established GenAI training programmes, despite 77% of leaders acknowledging limited workforce capabilities in GenAI applications.

68% cited transparency and explainability are the biggest ethical concerns, followed by 55% having privacy concerns.

Sheila Flavell, COO at FDM Group commented: “While it’s encouraging to see leaders planning to increase AI investments, the skills gap remains a stubborn blocker, and it’s down to organisations to prioritise equipping their workforce with the necessary skills and understanding of AI.

Training programmes tailored to GenAI are essential to ensure employees can harness its capabilities effectively, from front-office operations to data and innovation. Organisations should prioritise experiential learning through simulations of real-world scenarios, teaching staff not only how to identify risks and handle important tasks supported by AI.”

She added: “Investing in people is just as critical as investing in technology, and empowering employees with the tools and expertise they need to integrate and utilise GenAI responsibly. Organisations can foster a future-ready workforce capable of driving innovation and adapting to the evolving regulatory landscape.

This commitment to upskilling must also extend to entry-level talent, ensuring the next generation is well-equipped to thrive in an AI-led industry.”

Anna Anthony, EY UK Financial Services Managing Partner, commented: “GenAI is transformative, but firms must accelerate upskilling and regulatory preparedness to remain competitive. While some organisations are leading the charge, many are still grappling with foundational challenges in integrating this fast-evolving technology.”

82% of executives plan to increase GenAI investment in the next 12 months, as AI could impact up to 25% of FS roles in 2024, with entry-level positions being most affected. These concerns are surrounding regulatory uncertainty and limited GenAI knowledge, and these are seen as the biggest barriers to AI adoption.

Arjun Mahajan, Chief of Client Partnerships at AND Digital, said: “AI automation projects can have a transformative impact within financial services, yet if banks and financial institutions lack the personnel to oversee implementation, they risk not only missing out on the benefits, but falling behind the competition. As part of AI adoption, businesses need to equip staff with the necessary AI and data skills to develop a lasting confidence in using AI responsibly and effectively.”

He added: “This should form part of a people AND innovation approach to AI, building it into operations in a manner that unlocks productivity as well as empowers people. With that confidence, financial institutions and their staff will also be better placed to navigate incoming regulations and ensure the ethical use of AI.”

The survey underscores the urgent need for UK FS firms to implement structured upskilling initiatives and develop robust frameworks for regulatory compliance and ethical AI use. Firms must also address workforce readiness, with 63% of respondents still in the planning phases of GenAI training programmes.

The EY European Financial Services AI Survey reflects insights from leaders at 20 UK FS firms representing a combined market cap of nearly £200bn. The report sheds light on the current state of AI adoption, workforce readiness, and regulatory preparedness across the sector.