EY survey: Upskilling, regulation slow AI adoption in Europe

The latest EY European Financial Services AI Survey reveals that a lack of upskilling and insufficient regulatory preparedness are impeding the deeper adoption of Generative AI (GenAI) within European financial services firms.

The survey, which gathered insights from over 100 European financial services firms with a combined market capitalisation of nearly EUR €880 billion, indicates that while 90% of these firms have implemented AI into their operations to varying extents, their progression largely remains at the nascent stage. Notably, 8% have not adopted AI technologies at all.

Despite the broad adoption across the sector, only 9% of executives consider themselves ahead in AI integration. Furthermore, a mere 11% of firms reported feeling prepared for incoming regulations, such as the EU AI Act. This cautious stance is also reflected in the fact that just 25% of companies have set up new GenAI training programmes, though 60% are still at the planning phase.

Omar Ali, EY Global Financial Services Leader, stated: "GenAI continues to sit high on the agenda for financial services leadership teams, promising well-acknowledged new levels of productivity gain. There is little doubt within the sector that harnessing AI – and increasingly GenAI – is game-changing, but the implementation of an evolving technology, to budget, within risk appetite and across an entire workforce, is hugely complex and challenging. Whilst some firms have made huge leaps in adopting AI and have seen real benefits, many are struggling to keep pace."

On workforce impacts, the survey found that 66% of the executives believe that up to a quarter of European financial services roles could undergo significant changes due to AI, while 93% foresee up to 10% of roles potentially facing redundancy. Despite this forecast, concrete training initiatives remain limited, with merely 25% of respondents acknowledging existing programmes and 43% indicating that plans are still early stage.

Entry-level roles are particularly susceptible to changes from AI integration. While 59% of leaders foresee a transformative impact on these positions, restructuring efforts remain slow, with only 24% planning relevant changes and 25% considering AI training within their graduate programmes.

Data science and innovation continue to demand the most AI expertise, followed by increased demands in back-office operations and information technology. The top attributes needed in new hires include adaptability, innovative thinking, and collaborative skills, with technological savviness ranking lower than expected.

Regarding capital allocation, 72% of executives plan to increase investment in GenAI over the next year, a slight decrease from the 75% who planned similar investments in 2023.

The survey also underscored concerns related to GenAI integration. Leaders cited limited understanding and regulatory uncertainty as significant challenges. Ethical considerations, while previously a concern, have now been overtaken by the rapid pace of GenAI evolution and the associated costs.

Ayman Awada, EY EMEIA Financial Services Banking Technology and GenAI Leader, commented: "GenAI technologies are moving the goalposts of what is possible for financial services firms when it comes to operations and back-office processes. There is a small segment of the market that sits ahead of the curve by scaling AI capabilities at pace, but many firms are barely progressing from early-stage adoption and predominantly focus on the back-office."

The findings highlight the continued journey many European financial firms face in enhancing their AI capabilities. There remains an emphasis on increasing regulatory readiness and comprehensive workforce upskilling to fully realise AI's potential benefits.