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Artificial Intelligence in Financial Services

Managing machines in an evolving legal landscape


Artificial Intelligence in Financial Services

AI has the potential to super-charge financial services and transform the way services are delivered to customers. It could allow more informed and tailored products and services, internal process efficiencies, enhanced cybersecurity and reduced risk.

However, to properly understand the impact of AI, and the extent to which it really does herald the creation of a fourth industrial revolution, it is necessary to consider what AI really is and what it is capable of. It also necessary to address the regulatory and ethical challenges to its use. None of this means firms should shy away from the use of AI.

Approached properly this can provide significant benefits for the firm, its customers and wider society. Disruptive technology is a fact of life and it is not the strongest businesses that survive but the most adaptable to change.

We are beginning to see increased engagement from regulators with respect to AI, particularly in the financial services arena. In this report, we will explore both the existing and developing regulation of AI, and key legal issues that arise for businesses deploying the technology that is available today, in each case in the context of the financial services sector.

This is a complex and evolving area requiring a multidisciplinary legal approach.

Explore the key themes in the report

Financial services and the fourth industrial revolution

Don’t believe the hype. Or do. AI is not actually intelligent, but the practical barriers to deploying the technology are lowering all the time.

This chapter explores the challenges, the ethics, the ‘board room’ question and how regulators are responding and the initiatives that are underway across the globe to regulate AI.

The global regulatory landscape for AI

Given the specific risks AI poses, the challenge for lawyers is to understand both how existing legal and regulatory frameworks might apply and how regulation might develop in this area at an international, regional and national level.

This chapter reviews the existing regulatory framework, how regulators are responding, and regional and international initiatives.

AI and financial services regulation

All modern financial services are underpinned by IT systems and the failure or misuse of those systems can cause significant societal and customer harm.

This chapter focuses on the regulatory approach to new technologies in the UK for financial services including: operational resilience, accountability under the SMCR, safety, transparency and bias.

Data, privacy and the GDPR

Availability of new AI tools and services puts technology such as voice or facial recognition at the fingertips of financial services firms – allowing them to better track, monitor and predict behaviour of customers and employees…but should they?

This chapter explores the implications of data, AI and the fundamental principles of the GDPR.

Competition regulation

Competition authorities are increasingly turning their attention to digital markets and the effect of innovative technology on competition. Whist the development of ‘machine learning’, complex algorithms and systems capable of processing vast quantities of data has led to innovative commercial applications for AI, there are competing views as to how competition law should deal with these developments.

In this chapter we review the impact of competition law in financial services, what enforcement action has taken place to date and consider key issues around pricing, algorithmic collusion and regulatory engagement.


While AI is a powerful new form of computing technology, it is also unpredictable. There is a risk that the system underperforms or, without any common-sense override, makes decisions that are wildly wrong.

This chapter explores how to apply established legal concepts to new technology, focusing on Contract law and Tort law.

Looking forward

Governments and regulators clearly have work to do in the short term to address issues presented by narrow AI developed and deployed by financial services institutions and to anticipate how the technology may be used in the future.

This final chapter covers our thoughts on how this may continue to develop at national, regional and international levels.

More about AI in Financial Services


Jennifer Calver shares a summary of how Artificial Intelligence can deliver competitive advantage.


Ed Chan covers how regulators are responding to the use of Artificial Intelligence at a national, regional and global level.


Peter Church gives an overview of the challenges and ethics facing the deployment of Artificial Intelligence in Financial Services.

Download your copy of the report

Artificial Intelligence in Financial Services: Managing machines in an evolving legal landscape

AI in Financial Services report cover


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