UK financial services leaders are bullish on AI but firms are struggling to meaningfully implement solutionsMonday, January 29, 2024
London, 29th January 2024: New research from EXL [NASDAQ: EXLS], a leading data analytics and digital operations and solutions company, reveals that the vast majority (89%) of insurance and banking firms in the UK have launched AI point solutions and proofs of concept over the past year, but suggests that data optimisation must be a greater priority to achieve meaningful impact.
The research, published in EXL’s 2024 UK Enterprise AI: Bridging strategy and operations report “2024 EXL Enterprise AI UK Study,” is based on a survey of C-level executives, vice presidents and directors engaged in strategy, technology and business process at the UK’s top 100 insurance carriers and top 20 bank and non-bank lenders,
Findings revealed a significant cohort of ‘leaders’; 44% of those surveyed said they have implemented AI across eight or more business functions with areas of most extensive deployment including marketing and business development, and regulatory compliance. Naturally, this widespread implementation is facilitated by an strong willingness to invest in AI. Almost 9 in 10 (86%) financial services (FS) leaders reported their firms investing upwards of £7.9 million ($10 million) in their most recently completed fiscal year, and 35% report investment of £39 million ($50 million) or more.
Whilst the widespread implementation of AI within financial services, and an ambition to keep pace with technological change is broadly welcomed, the study suggests that organisations are perhaps not prioritising their data operations before they roll out the technology, with almost half (47%) agreeing that their organisation is ‘minimally data driven’.
Kshitij Jain, EMEA Practice Head & Global Chief Strategy Officer, Analytics at EXL commented “Our findings demonstrate that industry leaders recognise the transformative potential of AI for their businesses, but it’s also clear that they are under significant external pressure to implement the technology – especially while competition is hot and new solutions are being developed all the time.
The risk is that this mounting pressure can lead to investment that isn’t properly thought through. A need to move quickly can mean ensuring operations are truly data driven gets de-prioritised, and this can be a costly mistake. The outputs and impact of AI are greatly enhanced when implemented within an organisation which puts data architecture, quality, and governance at the top of the list.”
The research also highlighted a cohort of ‘Strivers’, representing 45% of respondents who report they are more narrowly implementing AI, across on average, four business functions. However, the study suggests their implementation is deeper and more focused in many cases, and as a consequence there are areas where they are over indexing– particularly the use of AI to lower costs, where they are 23 percentage points ahead of the Leader cohort.
Shining a spotlight on Generative AI implementation, nearly three quarters of senior FS executives surveyed reported already using the technology, more than the 50% noted by their U.S. counterparts, whilst over half (53%) admit their organisation is investing more in AI, due to the growth of generative AI. This is despite significant fears around the technology. A staggering 7 in 10 (70%) of UK senior executives in insurance and banking claim their organisation is deeply concerned about the use of generative AI, citing fears such as the potential brand impact of generative AI use going wrong (41%), risk to organisational brand reputation (36%), generative AI operating autonomously (34%), and inaccurate data impacting outcomes (33%).
Jain concluded, “From AI-driven back-office processes to customer-facing generative AI content, the key with any successful AI roll out is a measured and strategic approach. Getting data architecture right, experimenting with solutions in a sandbox environment, and training employees properly are critical steps in the journey, and neglecting them can result in wasted investment, and greater exposure to risk.
“For enterprise-wide adoption to succeed, boards must be bought into AI’s capabilities and AI must be tightly linked with strategy. Whilst it’s brilliant to see the evident enthusiasm for the technology coming from leaders at the UK’s top insurance and banking firms, the factor separating the wheat from the chaff now is how effectively investment is actually being used, and ensuring that implementation is wide, yet focused. Those firms able to properly identify priorities, and plan phased and growing AI implementation whilst ensuring they are appropriately data driven as a critical foundation, will find themselves pulling away from the pack.”
The full report, 2024 EXL Enterprise AI UK Study: Bridging Strategy and Operations, can be accessed here.
Research is based on a qualitative survey of 64 C-level executives, vice presidents and directors engaged in strategy, technology and business process at the UK’s top 100 insurance carriers and top 20 bank and non-bank lenders, conducted online and by phone.
EXL (NASDAQ: EXLS) is a leading data analytics and digital operations and solutions company that partners with clients to improve business outcomes and unlock growth. By bringing together deep domain expertise with robust data, powerful analytics, cloud, artificial intelligence and machine learning, we create agile, scalable solutions and execute complex operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media, and retail, among others. Focused on driving faster decision-making and transforming operating models, EXL was founded on the core values of innovation, collaboration, excellence, integrity and respect. Headquartered in New York, our team is over 50,000 strong, with more than 50 offices spanning six continents. For more information, visit www.exlservice.com.