The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

It prepared the industry for increased investment in AI and intensified the competition to make best use of this enhanced opportunity.

The revived enthusiasm for AI is set against several factors that I explored in previous UK Finance blogs. The ones that dominate our thinking this year include data and digital transformation, tech recruitment and retention, and regulatory reforms. Meanwhile, the worldwide expansion of cyberattacks has trained a spotlight on cybersecurity and the need for robust defences against fraud, privacy invasions, and misinformation.

1. Negotiating the shifting boundaries of AI and automation

The IMF's Kristalina Georgieva recently estimated that 60 per cent of employment in advanced economies is exposed to AI. This scale of potential change takes dealing with AI strategy and opportunities well beyond the scope of IT departments. Chief Operating Officers (COOs) in particular need to become digital and AI literate, engage in upskilling the workforce, and foster a culture of innovation. These are all tasks that require careful planning and execution.

In this context, striking the right balance between automation and human oversight is crucial.  For Hult, it depends on “correctly identifying the business goals and problems that need solving”. For UK financial institutions this includes onboarding new customers, conducting know your customer checks, and designing chatbots based on natural language and behavioural data.

2. Competing on data-driven digital transformation

To capitalise on the upsides of AI and automation, organisations need to focus on gathering clean, comprehensive data. Managing data assets efficiently applies to many other aspects of digital transformation, such as applying data analytics and integrating legacy systems.

The continued rise of open banking introduces further competition and collaboration opportunities for UK financial institutions, potentially partnering with fintechs or developing their own innovative solutions. According to Forbes, this will be a key trend “as we become more aware of the importance of understanding who has our data and what they’re doing with it”.

3. Overcoming the shortage of technology talent

While other sectors report a decline in vacancies, we expect tech recruitment and retention problems to persist in 2024. One approach to the issue is to embrace managed services deals, which are being actively promoted to financial firms’ COOs. Another is to develop a strategy to recruit in-demand skills and provide continuous workforce training to keep pace with evolving technologies.

Working with HR and other departments, COOs need to deliver what employees and prospective hires are looking for from an organisation and its culture, such as flexibility of time and location, a diverse workplace, ongoing education, and environmental responsibility.

4. Meeting new regulations and managing new risks

At Thomson Reuters, we are acutely aware that “integrating AI into the financial sector” brings complex legal and regulatory challenges, making “privacy, cross-border dataflows, and adherence to regulations like GPDR” critical. Other aspects of new legislation – such as the sustainability disclosure requirements in the Financial Services and Markets Act 2023 – mean that UK financial institutions must be more ethical and inclusive, and demonstrate a genuine commitment to ESG. 

Implementing effective risk management strategies is also an ongoing concern. The COO needs to collaborate with various stakeholders, including regulatory experts, IT departments, and risk management teams, to navigate these challenges.

5. Defending against cyber-threats and other potential disasters

Gartner forecasts that security and risk management expenditure will “total $215 billion in 2024, an increase of 14.3 per cent from 2023”. Therefore, it is essential for financial institutions to prioritise robust contingency planning, disaster recovery mechanisms, and cybersecurity and anti-fraud measures.

In many instances, partnering with specialist third-party providers is the right way to pursue operational resilience. Financial firms’ COOs are therefore investigating offerings such as the Confirmation platform, which provides protection for our many UK financial clients against the growing risk of financial fraud.

Thomson Reuters Confirmation is the leading digital platform and global network for confirming financial data. We help auditors, bankers, lawyers and businesses around the world work more efficiently, find truth in financial data, and detect fraud. Recognised as the industry standard for digital verification worldwide, today Confirmation helps 1.5 million customers in 170 countries to confirm financial data.

Thomson Reuters Confirmation

Confirmation helps over 4,000 banks and departments around the world respond to more confirmation requests in less time in a secure, client-friendly platform. Confirmation’s modern, efficient process standardises the way requests come to the bank, reducing the amount of manual data entry and potential for errors.

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