By Ayman Awada, EMEIA Financial Services Technology Consulting Leader, EY
Combining the best of human-driven insights with the breadth of generative AI capabilities is key to unlocking value across the banking sector.
After more than three decades of major digital transformations across European banks, the rise of artificial intelligence (AI) and generative AI (GenAI) technologies is reshaping opportunity, value creation and the future of work throughout the banking sector.
In the boardrooms of European banks, AI is prominent on every agenda—from opportunity, risk, customer, legal, regulatory and compliance perspectives. Banking leaders recognise the potential of GenAI’s large language models (LLMs) to transform propositions, from customer support and experience to internal operations, and are actively assessing opportunities to realise productivity gains.
The “EY European Financial Services AI Survey”1—which canvassed the views of 60 executives from listed and private financial firms (including 22 banks) across Europe—evidences the excitement, optimism and sense of opportunity shared by sector leaders as they assessed the road ahead for AI and GenAI adoptions.
But banking executives also highlighted the complex multidimensional challenges the sector is already navigating through its AI adoption: maximising human capital and experience, enhancing business efficiency and mitigating emerging risks.
To manage the next phase of AI adoption, leaders must adopt a strategic mindset. AI cannot be a “bolt-on” strategy siloed from the wider goals and objectives of the business. To enable responsible innovation and value creation that supports the development of the people driving the future of the European banking sector, AI needs to be a fully integrated component of organisations’ strategies.
Advancing the AI opportunity
According to the survey’s results, European banking leaders’ sense of optimism and confidence about the future of GenAI adoption is clear, and more than half (55 percent) are excited about what the acceleration of systems, applications and models could mean for their businesses.
For many banks, the rise of GenAI creates the potential to augment existing AI use cases, whether that means better understanding of and communications with customers, automated background tasks or personalised engagements.
Among European banks, the use of AI is most prominent in the fields of data science, IT (information technology), operations, risks and controls, and customer support.
In an intensely competitive sector, leaders are gauging their progress relative to their peers; 55 percent perceive their firms to be on par with competitors, while 36 percent believe their firms are behind the curve.
In a year’s time, 55 percent of banking leaders want to have established GenAI capabilities across a wider range of use cases; 14 percent aim to experiment with GenAI adoption to inform a longer-term plan; and another fifth (18 percent) plan to accelerate their GenAI adoptions rapidly to move ahead of their peers.
We expect the pace of change to continue to challenge banks’ abilities to adapt and respond. While this is familiar territory for a highly regulated sector adept at navigating dynamic change, the rate and efficacy of banks’ AI adoptions will become increasingly important, providing a competitive edge.
With spending on GenAI technologies already widespread (59 percent of firms have actively invested in it in the past year), it is the strategic execution of AI adoption and programmes that will differentiate the sector’s leaders. In the near term, competition looks set to continue, with 78 percent of banking executives planning to increase capital allocation over the year ahead.
Realising the potential of AI to enhance productivity
While Europe’s banking leaders target increased productivity, customer benefits and operational efficiencies through their investments in GenAI, realising and capitalising on potential gains requires in-depth, long-term planning. This is not yet in full force across the sector.
Nearly three-quarters (73 percent) of European banking leaders expect GenAI technologies to deliver windfalls in productivity and are bracing for significant impacts on their workforces and operations. Eighty-two percent of respondents anticipate that up to a quarter of all roles will require AI training or upskilling over the next year; nearly one-fifth (18 percent) believe it could be as much as a half.
Actions to support productivity gains through training and upskilling are not yet widespread, however. More than one-third of respondents (36 percent) have no plans in place to train their workforces in GenAI technologies, with a further 32 percent describing their plans as being “in their infancy”. Taking a more focused approach, 23 percent have implemented training for targeted groups, with an additional 9 percent reporting well-developed plans.
It is crucial that banks actively consider how AI and GenAI technologies can change both the nature of work and how people learn and build experiences throughout their careers.
Adapting to promote AI-enabled early careers
European banks are considering the potential impacts of AI adoption on the next generation of talent joining their organisations. Fifty-nine percent of executives expect new technologies to significantly impact the roles and tasks undertaken in entry-level or graduate roles.
It is encouraging to see forward planning and development of graduate schemes already in place across European banks. To manage the impacts, 27 percent of banks plan to integrate AI training within their graduate programmes, while 23 percent will undertake more widespread restructurings of roles and responsibilities across entry-level positions.
By removing repetitive tasks and increasing resourcing, AI can streamline administration, increase the rate of execution and build capacity across a team—creating opportunities to improve employee experiences and drive engagement. This long-term mindset will support the most effective integration of technology; ultimately, it’s not about what technologies can deliver but how they are applied and what they enable people to achieve.
Assessing opportunities to integrate GenAI technologies as part of their talent strategies can also help banks build a holistic picture of the structure of roles, skills gaps and training opportunities across their workforces.
Looking to the future and considering the attributes most valuable in a GenAI-enabled workforce, Europe’s banking leaders want to attract candidates with innovative and interdisciplinary mindsets who are agile and adaptable. Among experienced talent, banking leaders expect data science and innovation, information and technology, and operational skills to be most in demand as AI adoption accelerates over the next two years.
Harnessing the benefits of AI for all stakeholders
The Alan Turing Institute’s 2021 report, “AI in Financial Services”2, emphasised the need for responsible innovation across machine learning (ML), non-traditional data and automation—a need that will only increase as the use cases of GenAI evolve.
Leaders’ most prominent areas of concern around AI and GenAI adoption—knowledge and skills gaps, regulatory changes and AI’s ethical implications—evidence their commitments to responsible deployments of new technologies.
Banking leaders’ concerns around the ethics of GenAI centre on the potential for discrimination, bias, lack of fairness and privacy concerns alongside transparency and explainability. To counter these risks, some firms are on the front foot. Nine percent have already put AI ethics frameworks in place, while 27 percent are in the early stages of development.
Defining accountability is critical to ensuring that AI adoption is fully integrated as part of a sustainable business strategy. While half (55 percent) of banks’ technology teams will be responsible for integrating AI across the business, reporting to the chief information officer or chief digital officer, the others have yet to determine specific lines of accountability.
Establishing how organisations will approach, develop and integrate new capabilities across operations is a critical first step to mitigating risks. By ensuring that robust governance frameworks are in place, banks can build confidence in their abilities to harness the benefits of AI and GenAI technologies for their customers and staff.
Maximising the benefits of AI
As Europe’s banks continue to invest in AI technologies, the capabilities and benefits of tech-enabled banking—many of which remain untapped—will evolve. Across the sector, AI has the potential to radically improve operational efficiencies, enhance customer and employee experiences, and unlock new avenues of growth.
Of course, as with all new technologies, the integration of AI across operations presents new risks, and it will be essential that governance frameworks are built to high protection levels and ethical considerations remain front of mind.
AI is no substitute for human insight and vision, but it is increasingly clear that it will play a central role in modern banking, and the right balance is being found. From here, banks must continue to train and upskill their current and future workforces at pace as AI capabilities continue to transform today’s business capabilities.
1 EY (Ernst & Young): “Majority of European financial services leaders expect Generative AI to significantly affect productivity and change roles – but many firms still lack plans to upskill their workforce,” Sarah Graham, October 25, 2023, Press Release.
2 Zenodo: “AI in Financial Services,” Florian Ostmann and Cosmina Dorobantu, June 11, 2021, The Alan Turing Institute.