A new inquiry by the House of Commons’ Treasury Committee will consider the potential impacts of the increased use of Artificial Intelligence in financial services.
The Committee’s call for evidence is now open, as it seeks to understand how financial services can utilise AI whilst protecting consumers against potential risks.
Figures recently published from the Bank of England show that 75% of firms are already using AI, with a further 10% planning to use it over the next three years. However, the launch of ‘DeepSeek’ reminded observers of the volatility and rapidly evolving nature of the AI market.
This inquiry could explore how AI is currently used by City firms as well as what opportunities it brings for innovation in the financial services sector. MPs may also consider the potential impact on employment in the sector and ask how the UK compares to other countries in both its competitiveness and approach.
The Committee may review the extent to which AI could jeopardise financial stability and question if there is the potential for increased cyber security risks.
MPs also want to understand what safeguards may be needed to protect financial consumers, particularly vulnerable ones who may be at risk of bias.
Chair of the Committee, Dame Meg Hillier, says: “Successive governments have made clear their intention to embed and expand the use of AI to modernise the economy.
“My committee wants to understand what that will look like for the financial services sector and how the City might change in the coming years as that transformation gathers pace.
“It’s critically important the City can capitalise on innovations in AI and continue to be a world leader in finance. We must, though, also be mindful of ensuring there are adequate safeguards in place to mitigate the associated risks, particularly for customers. This piece of work will allow us to see the full picture.”
The Committee wants to hear from a range of voices including the finance industry, AI sector, consumers and experts. The deadline for submissions is Monday 17 March.
Here are the terms of reference:
How is AI currently used in different sectors of financial services and how is this likely to change over the next ten years? This may include:
- Are there particular areas of financial services that are adopting AI more quickly and at higher rates of penetration than others? Are Fintech firms better suited to adopting AI? What percentage of trading is driven by algorithms/artificial intelligence?
- Are financial services adopting AI at a faster rate than other sectors in the economy?
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To what extent can AI improve productivity in financial services? This may include:
- Where are the best use cases for AI? Which particular transactions may benefit from AI?
- What are the key barriers to adoption of AI in financial services?
- Are there areas where the financial services should be adopting GenAI with little or no risk?
- Are there likely to be job losses arising from AI in financial services and if so, where?
- Is the UK’s financial sector well-placed to take advantage of AI in financial services compared to other countries?
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What are the risks to financial stability arising from AI and how can they be mitigated? This may include:
- Does AI increase the risks relating to cybersecurity?
- What are the risks around third-party dependencies, model complexity, and embedded or ‘hidden’ models?
- How significant are the risks of GenAI hallucination and herding behaviour?
- Are the risks of having AI tools used in the financial sector concentrated in the hands of a few large tech companies? To what extent do the AI financial market tools rely on social media outlets? E.g. trading algorithms using social media posts?
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What are the benefits and risks to consumers arising from AI, particularly for vulnerable consumers? This may include:
- What benefits to consumers might arise from using AI in financial services? for example, could AI be used to identify and provide greater assistance to vulnerable consumers?
- What is the risk of AI increasing embedded bias? Is AI likely to be more biased than humans?
- What data sharing would be needed to make AI more effective in financial services, and will there be a need for legislative change to achieve that?
- Are there any current or future concerns around data protection and AI in financial services?
- What sort of safeguards need to be in place to protect customer data and prevent bias?
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How can Government and financial regulators strike the right balance between seizing the opportunities of AI but at the same time protecting consumers and mitigating against any threats to financial stability? This may include:
- Are new regulations needed or do existing regulations need to be modified because of AI?
- Will Government and regulators need additional information, resources or expertise to help monitor, support and regulate, AI implementation in financial services?
