With a vision to becoming a global AI superpower in the coming decade, the UK Government has released its ‘National AI Strategy’. In this article, Charlotte Gregory and Sally Caswell discuss AI in Fintech, explore the aims of the Strategy and unpack the associated regulatory challenges.
Whilst the UK’s Strategy notes that a singular definition of AI cannot be suitable for every scenario, it is described broadly as “Machines that perform tasks normally requiring human intelligence, especially when the machines learn from data how to do those tasks”.
Already a crucial part of the FinTech space, AI uses range from collecting data, analysing information, facilitating transactions and streamlining processes. One recent development is robo-advisors – online platforms that can independently manage investments, suggest personalized portfolios and determine optimal investment strategies using big data trends. Other examples include chatbots, which can be used by firms to answer customer service queries. Evolving rapidly, they are able to learn from conversations and customize future customer interaction accordingly.
Whilst already established in the financial services industry, the Government’s intention is to introduce AI across a wider range of sectors in the next 10 years. The Strategy focuses on three primary goals or ‘pillars’, outlined below:
Whilst the Strategy provides ambitious goals for the UK’s AI space, it lacks a regulatory framework for implementation in the UK. Admittedly, regulation of AI is likely to be complex and difficult to implement. Given that AI is constantly evolving, so too are the risks. Algorithmic bias, discrimination and misuse of personal and financial data are just a few examples. However, it is anticipated that proposals on governing and regulating AI will follow in the White Paper due to be published in early 2022.
Staying up to date on the latest regulation will be key for financial services firms currently using or looking to use AI. Our team has experience advising a number of InsurTech and FinTech clients and can help you to navigate the changing and complex UK regulatory environment. If you have any questions on any of the above or wish to discuss, please don’t hesitate to contact us. Our team will be happy to help.