A new inquiry by the Treasury
Committee will consider the potential impacts of the increased
use of Artificial Intelligence (AI) in banking, pensions and
other financial services.
The Committee's call for evidence is now open, as it seeks to
understand how financial services can utilise AI whilst
protecting consumers against potential risks.
Figures recently published from the Bank of England show that 75%
of firms are already using AI, with a further 10% planning to use
it over the next three years. However, the launch of ‘DeepSeek'
reminded observers of the volatility and rapidly evolving nature
of the AI market.
This inquiry could explore how AI is currently used by City firms
as well as what opportunities it brings for innovation in the
financial services sector. MPs may also consider the potential
impact on employment in the sector and ask how the UK compares to
other countries in both its competitiveness and
approach.
The Committee may review the extent to which AI could jeopardise
financial stability and question if there is the potential for
increased cyber security risks.
MPs also want to understand what safeguards may be needed to
protect financial consumers, particularly vulnerable ones who may
be at risk of bias.
Chair of the Committee, Dame , said: “Successive governments have made
clear their intention to embed and expand the use of AI to
modernise the economy.
“My committee wants to understand what that will look like for
the financial services sector and how the City might change in
the coming years as that transformation gathers pace.
“It's critically important the City can capitalise on innovations
in AI and continue to be a world leader in finance. We must,
though, also be mindful of ensuring there are adequate safeguards
in place to mitigate the associated risks, particularly for
customers. This piece of work will allow us to see the full
picture.”
The Committee wants to hear from a range of voices including the
finance industry, AI sector, consumers and experts. The
deadline for submissions is Monday 17 March.
Full terms of reference are as follows:
How is AI currently used in different sectors of
financial services and how is this likely to change over the next
ten years?
This may include:
o Are there particular areas of financial services
that are adopting AI more quickly and at higher rates of
penetration than others? Are Fintech firms better suited to
adopting AI? What percentage of trading is driven by
algorithms/artificial intelligence?
o Are financial services adopting AI at a faster rate
than other sectors in the economy?
To what extent can AI improve productivity in financial
services?
This may include:
o Where are the best use cases for AI? Which
particular transactions may benefit from AI?
o What are the key barriers to adoption of AI in
financial services?
o Are there areas where the financial services should
be adopting GenAI with little or no risk?
o Are there likely to be job losses arising from AI
in financial services and if so, where?
o Is the UK's financial sector well-placed to take
advantage of AI in financial services compared to other
countries?
What are the risks to financial stability arising from AI
and how can they be mitigated?
This may include:
o Does AI increase the risks relating to
cybersecurity?
o What are the risks around third-party dependencies,
model complexity, and embedded or ‘hidden' models?
o How significant are the risks of GenAI
hallucination and herding behaviour?
o Are the risks of having AI tools used in the
financial sector concentrated in the hands of a few large tech
companies? To what extent do the AI financial market tools rely
on social media outlets? E.g. trading algorithms using social
media posts?
What are the benefits and risks to consumers arising from
AI, particularly for vulnerable consumers?
This may include:
o What benefits to consumers might arise from using
AI in financial services? for example, could AI be used to
identify and provide greater assistance to vulnerable
consumers?
o What is the risk of AI increasing embedded bias? Is
AI likely to be more biased than humans?
o What data sharing would be needed to make AI more
effective in financial services, and will there be a need for
legislative change to achieve that?
o Are there any current or future concerns around
data protection and AI in financial services?
o What sort of safeguards need to be in place to
protect customer data and prevent bias?
How can Government and financial regulators strike the
right balance between seizing the opportunities of AI but at the
same time protecting consumers and mitigating against any threats
to financial stability?
This may include:
o Are new regulations needed or do existing
regulations need to be modified because of AI?
o Will Government and regulators need additional
information, resources or expertise to help monitor, support and
regulate, AI implementation in financial services?
