UK banks differ from US on AI strategy

Banks in the UK are more likely to focus artificial intelligence (AI) strategy on improving customer experience compared to their US rivals, a new report has revealed.

NTT Data’s ‘Intelligent Banking in the Age of AI’ found 52 per cent of UK banks were using AI to enhance customer services, rather than cut jobs. This marks a break from their US counterparts, where 59 per cent of firms prioritised their AI usage on cutting costs.

Roberto Freddi, partner and European lead of financial services at Kearney told City AM : “This isn’t about job cuts, it’s about adopting smarter solutions that can improve service quality and customer satisfaction, demonstrating that the tech is a powerful tool for positive transformation, benefitting both customers and employees.”

The report highlighted 37 per cent of European banks say regulation is the biggest AI roadblock slowing adoption.

This comes amidst a push in the UK for further deregulation, spearheaded by Chancellor Rachel Reeves.

Freddi said the different regulatory paths across Europe created a “fragmented landscape for banks”.

“Regulation is emerging as the biggest roadblock to AI adoption for European banks, reinforcing the need for clear frameworks that drive innovation while ensuring compliance,” he added.

Banks in Europe were also four times more likely than their US counterparts to have their chief executive driving AI strategy.

Gordon Baggott, director of AI at 4most, told City AM: “The greater focus of CEOs on AI strategy in Europe versus US banks may well be linked to the differences in regulatory approach between the regions.

“The more growth-first approach being taken by the UK and US governments is likely to create a more principle-based regulation landscape.”

Banks urged to be ethical

A quarter of UK banks look to remove manual input on tasks, by switching to a fully automated model. However, this trails behind US rivals with a third aiming for full automation.

The CFA Institute’s senior head of research Rhodri Preece called for a hybrid approach between AI and human input to ensure “better decision-making and stronger investor outcomes”.

Preece told City AM : “Banks must prioritise ethical considerations and the explainability of AI-driven models to maintain trust in financial decision-making.

Several of the UK’s biggest lenders have already created their own AI ethics team, including Lloyds, Natwest and HSBC.

Natwest launched its AI & Data Ethics Code of Conduct last year, which the bank referred to as its “north star” for using AI and data responsibly.

Robb Rasmussen, head of global marketing & communications at NTT DATA said “generative AI represents a pivotal moment for the banking industry”.

“While the potential benefits are enormous, the challenges of implementing GenAI are complex and varied, requiring careful navigation and a structured approach.

“Given the anticipated high spending on GenAI, achieving a return on investment is crucial.”