Study Shows Generative AI Could Add £41.7bn To UK Financial Sector

In a groundbreaking study released by Fifty One Degrees on 19 March 2024, it has been revealed that a significant majority of tasks within the UK's financial services sector could see substantial benefits from the integration of generative AI (GenAI) technology. The analysis, which scrutinized 311 tasks across fourteen functions in banks, insurance companies, and other financial services firms, found that an impressive 84.6% of these activities could be enhanced by AI, potentially generating an additional £41.7bn in economic output for the sector.

The research highlights that GenAI Assistants, tailored to support team members in specific functions, could positively impact 74.9% of tasks. These AI assistants are particularly effective in areas dealing with large volumes of natural language information, such as Compliance, Legal, Risk Management, and Underwriting. While some roles will see an increase in efficiency, others may witness automation of workflows altogether.

Furthermore, the study indicates that internally focused tasks stand to gain the most from AI deployment, with a projected efficiency increase of 41%, compared to a 34% improvement for customer-facing tasks. This efficiency gain is part of a broader potential for GenAI to elevate the economic output in financial services by up to 15%, equating to an additional £41.7bn from the sector.

Other AI tools, often powered by Generative AI and Large Language Models, are also expected to make a significant impact, enhancing 39% of activities within financial services. These tools span various applications including AI-powered training and AI-based legal and finance tools.

The analysis further identifies specific functions that could benefit immensely from GenAI technology. Analytics & Data Science, Technology, Customer Services, and Underwriting functions are likely to see both an increase in efficiency and an improvement in the quality of work delivered. However, areas such as Compliance, Enterprise Risk, and Legal may experience substantial efficiency gains without a corresponding increase in work quality.

The economic implications of GenAI within the banking and financial services are profound. Recent estimates suggest that Generative AI could contribute between $2.6 trillion to $4.4 trillion annually to global companies' value. For Financial Services and Insurance alone, this represents $200 billion to $340 billion or 9 to 15 per cent of operating profits. Given that the UK financial services and insurance industries generate £278bn of economic output, a 15% boost from GenAI could significantly enhance this figure by £41.7bn.

Nick Harding, co-founder and CEO of Fifty One Degrees, emphasized the critical role of the UK financial services industry as both a local economic powerhouse and the nation's largest export. "Assertively adopting generative AI will enable UK financial services to grow further, ensuring this vital sector remains a global leader," Harding stated. He also pointed out the rapid development and evolution of GenAI technology and its capabilities as an indicator of the increasing opportunities for businesses to benefit in the future.

This study underscores the transformative potential of GenAI technology in reshaping the landscape of financial services in the UK. By harnessing these advanced technologies, the sector not only stands to gain in terms of efficiency and economic output but also positions itself at the forefront of technological innovation on a global scale.