On 28 January 2025, UK Finance published a report on Generative AI in Action: Opportunities & Risk Management in Financial Services. The report looks at the current and emerging use cases of generative artificial intelligence (AI) in the financial sector, along with emerging risk mitigation techniques.
The report concludes that the financial services sector is investing more in AI and that overall, firms are benefitting from their investment in generative AI. It identifies 7 key areas where generative AI is driving the most value:
- Customer engagement and personalised marketing.
- Knowledge management and information retrieval.
- Software development and data management.
- Intelligent workflow and email processing.
- Fraud and financial crime.
- Legal, contractual and compliance text analysis.
- Desktop and meeting productivity.
Key areas of risk flagged in the report are:
- Reliability of outputs, noting that generative AI models (particularly Large Language Models or LLMs) could produce bias, errors, or inappropriate language. The report explains that firms mitigate these risks by carefully selecting models, fine-tuning them using use case-specific datasets, and ongoing testing of outputs.
- Data privacy and security – the report states that in addition to risks common to many systems, such as inadequate handling of input data, LLMs can produce or reveal personal information in unexpected ways. Strong data protection practices and cybersecurity measures are critical, with new measures emerging such as personal information ‘filters’.
- Third party considerations, with a warning that relying on external AI providers can reduce control. Firms can enhance third-party risk management processes to deal with this.
The report highlights that to support further innovation, ongoing collaboration is needed with regulators and government, as well as engagement with customers. It notes that: “Building trust through transparency and education, and ethical practices is key to ensuring AI’s potential is realised.”