{"id":437152,"date":"2026-01-29T16:24:22","date_gmt":"2026-01-29T16:24:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/437152\/"},"modified":"2026-01-29T16:24:22","modified_gmt":"2026-01-29T16:24:22","slug":"about-ai-in-financial-services-financial-services","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/437152\/","title":{"rendered":"About AI In Financial Services – Financial Services"},"content":{"rendered":"

Herbert Smith Freehills Kramer LLP\u2019s articles from Herbert Smith Freehills Kramer LLP are most popular:<\/p>\n


\n within Finance and Banking topic(s)
\n in United States
\n with readers working within the Property and Law Firm industries <\/p>\n

Herbert Smith Freehills Kramer LLP are most popular: <\/p>\n


\n within Transport, Antitrust\/Competition Law and Employment and HR topic(s)
\n with Inhouse Counsel <\/p>\n

The uptake of AI use cases in the financial services sector has
\nbeen faster than regulators had initially envisaged. In financial
\nservices, AI is being used to: optimise internal processes;
\ntransform customer relationships; target marketing and offer
\nservices; assist in credit assessments; automate trading systems;
\ndetect patterns and make future value predictions; support
\nknow-your-customer (KYC) and due diligence processes; monitor
\nrisks, regulatory compliance and employees; shed light on dark data
\nfor underwriting and collection purposes; report data to
\nregulators; and more. Some firms are also already investing in
\nquantum computing projects, in anticipation of quantum
\nviability.<\/p>\n

\"1738036a.jpg\"\/<\/p>\n

In November 2024, the Bank of England reported that more than 75% of
\nfinancial services firms were using AI systems<\/a>. Over 50% of all
\nfinancial services AI use cases have some degree of automated
\ndecision-making: around 24% are semi-autonomous (designed to
\ninvolve human oversight for critical or ambiguous decisions) and as
\nof November 2024, only 2% were fully autonomous.<\/p>\n

\"1738036b.jpg\"\/<\/p>\n

Research from Russell Reynolds<\/a> suggested that
\nin the first half of 2025 around 91% had taken steps towards
\nimplementing generative AI in their workflow.<\/p>\n

Against this background of increasing take-up, a third of
\nfinancial services use cases are third-party implementations
\n\u2013 this poses challenges in terms of transparency, governance
\nand control, in addition to a degree of concentration risk at the
\nlevel of cloud, model and data providers. More concerningly, only
\n34% of firms using AI felt they had a complete understanding of the
\ntechnologies they used; 46% reported only partial understanding.
\nNonetheless, 40% of firms are using AI to optimise their own
\ninternal processes.<\/p>\n

Regulatory approaches<\/p>\n

The regulators, often with strong encouragement from
\ngovernments, are taking steps to ensure firms are empowered to
\nembrace automation and capitalise on the many opportunities it
\ncreates. The vision is that AI will help to enhance growth, market
\nintegrity and consumer outcomes.1 Most regulators seek
\nto foster the development of these systems through the provision of
\ntesting environments for AI that simulate conditions close to the
\nreal world, as well as other forms of private\/public collaboration.
\nUnsurprisingly, however, the regulators also expect firms to ensure
\nappropriate management of the risks that the use of this technology
\nmay introduce or amplify.
\n<\/p>\n

Markets remain complex, nuanced and deeply human. The value of
\nskilled, well-trained analysts \u2013 those who understand market
\nbehaviour, context and intent \u2013 is not diminished by
\ntechnology. If anything, it’s amplified.<\/p>\n

Dominic Holland

\nFCA Director of Market Oversight, November 2025<\/p>\n

While a few jurisdictions have sought to adopt
\ntechnology-specific legislation and rules, many jurisdictions and
\nregulators (for example, the UK and Hong Kong) aim to take a
\ntechnology neutral or agnostic stance, welcoming the use of
\n‘good technology’ to support and enhance decision-making
\nbut only as long as firms maintain robust governance, oversight and
\ntesting and comply with existing regulatory requirements. The
\nresult is that existing regulatory requirements \u2013 many of
\nwhich were originally developed in a more analogue context \u2013
\nnow apply in an increasingly digitalised operating environment.
\nThat said, regulators are also beginning to develop guidance and
\nbest practices on the basis of their growing experience of the
\nrange of AI use cases being deployed by the firms they
\nregulate.<\/p>\n

Nonetheless, as Dominic Holland, Director of Market Oversight<\/a>
\nat the UK Financial Conduct Authority (FCA), recently said, AI
\ncannot replace human judgement. Interestingly, he noted that
\nregulations are written with individuals in mind and stressed that
\nthe regulators’ experience is in interrogating, issuing
\ndirections to, and taking action against individuals, including
\nindividuals within a body corporate.<\/p>\n

Some regulators, like the Hong Kong Monetary Authority (HKMA),
\nrequire firms to allow customers to opt out or request human
\nintervention in customer facing applications using GenAI, and the
\nHong Kong Securities and Futures Commission (SFC) imposes stricter
\nrequirements on high-risk activities like the provision of
\ninvestment recommendations, investment advice and investment
\nresearch using GenAI models.<\/p>\n

The Republic of Korea and Vietnam are progressing detailed and
\ncomprehensive requirements specifically governing the use of AI
\nrather than focusing on financial services specifically; Indonesia,
\nThailand and the Philippines are also considering a comprehensive
\nlegislative approach, and the UK too is contemplating possible
\ncross-sector legislation. The Australian government has, for now at
\nleast, rejected a proposal for stand-alone legislation.<\/p>\n

On the other hand, having finalised AI-specific legislation, the
\nEU is now delaying implementation of requirements for ‘high
\nrisk’ applications until harmonised standards and support tools
\nare in place and is considering targeted measures to simplify the
\nEU AI Act to help foster growth and innovation. In common with
\napproaches elsewhere, EU AI regulation stresses the need for
\nappropriate human oversight measures in addition to adequate risk
\nassessment and mitigation systems, quality of datasets,
\ntransparency, monitorability, security and robustness.<\/p>\n

Fundamentally, AI will continue to be a focus for regulatory,
\nsupervisory and use case development through 2026 and beyond.<\/p>\n

Footnote<\/p>\n

1 The HKMA, for example, notes potential uses such as the
\nidentification of vulnerable customers, and those who may need more
\ninformation or clarifications to better understand product
\nfeatures, risks, and terms and conditions, and the issuance of
\nfraud alerts to customers engaging in transactions with potentially
\nhigher risks: See HKMA Circular<\/a> on customer protection in
\nrespect of the use of Generative Artificial Intelligence, 19 August
\n2024 (HKMA GenAI Circular).<\/p>\n

The content of this article is intended to provide a general
\nguide to the subject matter. Specialist advice should be sought
\nabout your specific circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"Herbert Smith Freehills Kramer LLP\u2019s articles from Herbert Smith Freehills Kramer LLP are most popular: within Finance…\n","protected":false},"author":2,"featured_media":59608,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[23,3,21,19,22,20,25,24],"class_list":{"0":"post-437152","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-states","8":"tag-america","9":"tag-news","10":"tag-united-states","11":"tag-united-states-of-america","12":"tag-unitedstates","13":"tag-unitedstatesofamerica","14":"tag-us","15":"tag-usa"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/437152","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=437152"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/437152\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/59608"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=437152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=437152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=437152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}