New IIF-EY Survey Finds Generative AI Could be Revolutionary for Financial Services
December 14, 2023
Washington, D.C. – The Institute of International Finance (IIF) and EY published the results of its 2023 annual survey of global financial institutions on artificial intelligence (AI) / machine learning (ML) use in financial services. The survey included a globally diverse group of 65 financial institutions from across nine regions, responding to questions on AI/ML usage, governance and controls in financial institutions.
“This year has been an inflection point in the development and deployment of AI across all industries. While financial services firms have employed and managed AI for years, generative AI and Large Language Models have changed the landscape,” said Jessica Renier, Managing Director of Digital Finance at IIF. “This year’s survey results underscore that financial institutions are moving forward in AI with a strong focus on governance, ethics, controls and regulatory engagement.”
“With the emergence of GenAI, the use of AI/ML has never been more prominent in financial services. The 2023 survey performed by the IIF and EY demonstrates just how impactful AI has been (with continued expected growth), as well as the steps institutions are taking to make sure their adoption of AI/ML is safe and responsible,” said Jan Bellens, EY Global Banking and Capital Markets Sector Leader.
Key Survey Findings:
- Generative AI: Financial institutions are increasingly integrating generative AI into their work. This shift is evident in the survey results, with 86% of respondents expecting a significant or moderate increase in their model inventory due to generative AI adoption. Respondents noted that near-term use cases include risk identification and assessment, code assistance, document querying and extraction, and financial crime/anti-money laundering (AML), but all respondents in the U.S. and Asia Pacific (excluding Japan and China) impose at least some restrictions on the use of generative AI. 37% of respondents described the potential impacts of generative AI techniques as “revolutionary” on their business, indicating they see significant expansion in use cases ahead.
- AI/ML Governance, Oversight and Ethics: Governance is top of mind, with 66% of respondents reporting a C-suite manager either currently or imminently responsible for AI/ML ethics and governance. A majority of respondents in the U.S., and half of respondents in Canada and Asia Pacific (excluding Japan and China) currently have one in place, while all respondents in China currently have a C-suite manager responsible for AI/ML ethics and governance. Moreover, 41% of institutions report relying on existing model risk management or enterprise risk management (ERM) frameworks, while 49% have developed or are developing new frameworks for governance.
- AI/ML Usage and Controls: AI is widely being used in production, with 84% of respondents reporting current usage of AI/ML techniques in production today. Over the next three years, risk and compliance, operations, technology and data, and retail/consumer are predicted to be the most relevant areas of AI/ML usage for institutions surveyed.
- Regulatory and Supervisory Engagement: As regulatory interest in AI/ML heats up, explainability and bias have emerged as the top issues of global regulatory focus. 53% of respondents have already engaged regulators/supervisors in the application of AI/ML techniques, and an additional 33% plan to do so within the next three years. Regulatory engagement seems to be particularly important for U.S. institutions – 88% have already engaged regulators on the use of AI/ML. Furthermore, 57% of respondents noted that there are regulatory developments in their home jurisdiction that could impact their adoption of AI /ML.
- AI/ML Third-party Usage: A majority of survey respondents expect increasing reliance on third-party AI/ML models over the next year. 87% of respondents require third-party models to have the same level of validation as required for internally developed models, but many highlight the challenge of obtaining requisite information to perform that same level of validation.
The 2023 IIF-EY survey paints AI/ML as a transformative – even “revolutionary”— technology for the financial sector, as financial institutions are reckoning with the potential, and associated risks, of generative AI developments this past year. The industry's focus on regulatory engagement and comprehensive governance structures underlines its commitment to responsible and innovative AI/ML deployment.
For more insights, read the full IIF-EY 2023 Public Survey Report on AI/ML Use in Financial Services.
About the Institute of International Finance (IIF): The Institute of International Finance (IIF) is the global association of the financial industry, with about 400 members from more than 60 countries. The IIF provides its members with innovative research, unparalleled global advocacy, and access to leading industry events that leverage its influential network. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. IIF members include commercial and investment banks, asset managers, insurance companies, professional services firms, exchanges, sovereign wealth funds, hedge funds, central banks and development banks. To learn more about IIF, please visit www.iif.com, follow us on Twitter, LinkedIn or YouTube, or check out IIF’s podcasts.