Balancing risk, compliance and AI

Adoption of Artificial Intelligence (AI) continues to increase across a wide range of sectors as advancements in technology generate returns for many businesses. However, for financial services, the latest McKinsey Global Survey demonstrates that there is close to a 25% year-on-year increase in the use of AI in standard business operations. 

McKinsey Global also demonstrate that financial services organisations that see the most value from their AI usage are also more likely to invest their digital budget in optimising further AI solutions and: 


  • 55% have a road map clearly prioritising AI initiatives linked to business value  
  • 43% have a clearly defined AI vision and strategy 
  • 60% senior management is fully aligned and committed to organisation’s AI strategy 
  • 43% have an active program to develop and manage an extensive range of AI ecosystem partnerships (e.g., with other businesses, academia, etc.) 
  • 53% AI strategy aligns with the broader corporate strategy  

The power of AI is transforming a broad spectrum of business functions within financial services, including: 


  • Dealing with data-heavy tasks on a large scale quickly
  • Accurately detecting systemic faults  
  • Adding another layer of protection for businesses and consumers 
  • Analysing complex data and managing solutions  
  • Carrying out administrative tasks so that employees can work on more high-value services 
  • Minimising time taken to complete tasks and reduce errors


However, AI comes with its challenges. AI can create new types of risks and many C-suite executives find themselves trying to find the right balance between maximising the benefits of AI without creating intractable risk and compliance issues.  

Artificial intelligence in compliance  

The UK’s Financial Conduct Authority (FCA) has fine-tuned its policy regarding the use of AI and machine learning in financial services firms, demanding full transparency from banks, that their use of automated decision making is justified and that data is used ethically.  

As with all new and emerging technologies, the wider understanding of the risk and compliance implications takes time to achieve. For this reason, many business leaders lean towards a cautious and hesitant approach when it comes to implementing innovative systems across businesses. This is particularly evident when it comes to compliance-related issues for AI in financial services as:  

  • AI is complex in nature 
  • There is a shortage of AI programmers globally  
  • There is a lack of standardisation of the use of AI in financial services 
  • There is a risk of bias in decision-making as AI is programmed by humans  
  • AI solutions learn and evolve over time and can make auditability and traceability challenging 

With problems such as these, it’s not surprising regulators are taking their time to understand the compliance needs of AI’s usage in the financial sector.  

AI and risk management  

The challenge in implementing AI is not only about mitigating new types of risks, but that it can also make existing risks harder to identify in an efficient and cost-effective manner. Given AI’s complexity and the speed in which it analyses huge amounts of data, certain risks will manifest themselves in unfamiliar ways.  

This means that financial services firms should enhance their existing processes and procedures for managing risks and fill in the necessary gaps when adopting AI into their business.  


AI in banking and the reality behind the hype  

To overcome obstacles and reap the full benefits of AI adoption in both compliance and risk management, it is critical for senior management to understand the technology, including both its potential use within their organisation and the possible implications of AI from a risk perspective. This will be essential not only from a business point of view, but from a regulatory one too.  

While there are evidently clear benefits to be had from implementing AI solutions in the financial services sector, for now they should be used as technologies that complement existing processes and procedures to improve customer experience without impacting compliance requirements too much.  


Building your risk and compliance team 

Barclay Simpson is an international recruitment consultancy that specialises in recruiting professionals for the interrelated disciplines of Governance, namely Information/IT Security, Risk, Resilience, Audit, Compliance, Legal and Treasury. 

When you’re looking to build and secure your organisation for years to come, Barclay Simpson can help you quickly build a technically proficient team.  


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