How the EU AI Act will impact AI development and adoption within the UK’s Financial Services Industry

2 min read

What is the EU AI Act: the key takeaways


The December 2023 EU AI Act is the first comprehensive legal framework for AI in the world. It aims to promote trustworthy AI by addressing key risks, ensuring fairness, and protecting fundamental rights. 

While the UK is no longer part of the EU (shh, don’t mention the B word), the Act will still have a big impact on the development and implementation of AI in the UK financial services sector. Here’s why:


Key elements of the AI Act that you need to know:


  • Risk-based approach: The Act categorises AI systems based on their potential risk. High-risk systems, such as credit scoring or fraud detection, have stricter regulations.


  • Transparency and explainability: Developers must explain how decisions are made by high-risk systems, allowing for better understanding and potential challenges.


  • They need to design the model to prevent it from, for example, generating illegal content or publishing summaries of copyrighted data used for training.


  • Prohibition on certain AI uses: Practices like social scoring (e.g. classifying people based on behaviour, socio-economic status or personal characteristics) and manipulative content generation (e.g. voice-activated toys that encourage dangerous behaviour in children) are strictly forbidden. 


  • Human oversight: Humans must be ultimately responsible for the development and use of high-risk AI systems.


How this affects AI adoption for UK financial services:


  • Compliance considerations: For UK financial companies doing business in the EU or offering services to EU citizens, the EU AI Act means following its rules. This adds extra steps and potentially higher costs, but it’s important to ensure compliance across the board.


  • Global Standards in the making? The Act might indirectly influence UK regulations by setting a global standard for what “good” AI looks like. This could actually make things easier in the long run for companies operating in both the EU and UK, as they wouldn’t have to navigate two separate sets of rules.


  • Responsible AI in finance: The Act’s principles should encourage the UK financial sector to be more thoughtful when developing and using AI. This means putting fairness, transparency, and minimising risks at the forefront.


  • Innovation and responsibility: Stricter regulations might make it slightly trickier to develop cutting-edge AI applications in finance. However, it could also push companies to be more responsible in their development, ultimately minimising potential risks.


Uncertainties and future developments


The EU AI Act will undoubtedly impact the UK’s financial sector despite not directly applying within its borders. The UK’s response remains a question mark: will it mirror the EU’s approach, creating a unified system, or forge a separate path with potentially diverging regulations? This decision sits at the intersection of the UK’s recent commitment to responsible AI development, as evidenced by its own regulatory advancements, and the evolving landscape of AI itself. 

With the potential for future revisions to the EU Act adding another layer of complexity, the coming years will be crucial.

Related posts

Adviser productivity
The landscape of mergers and acquisitions (M&A) in wealth management is undergoing significant changes, driven largely by evolving regulatory scrutiny. In a recent webinar, Jana Sivananthan, CRO at 7IM along...
Aveni’s fine-tuned RoBERTa language model has been knocking it out of the park when it comes to detecting vulnerabilities in call transcripts, even beating the latest GPT-4. Over the past...
In this webinar, Aveni’s CEO, Joseph Twigg, Head of NLP, Iria Del Rio and Chief Client Officer, Robbie Homer-Plews, held a live Q&A bootcamp as a crash course in AI...
Financial Services
Just four months into 2024 and the FCA has been relentless at proving that Consumer Duty is every bit the ‘TCF with teeth’ the industry expected it to be. Companies...
The financial services (FS) industry is steeped in complexity and ever-evolving regulations. From process inefficiencies to outdated legacy systems that require manual data input that hasn’t been maintained to a...
What is the EU AI Act: the key takeaways   The December 2023 EU AI Act is the first comprehensive legal framework for AI in the world. It aims to...
Consumer Duty
Based on current trends and strategic planning, here are the top 5 regulatory developments the Financial Conduct Authority (FCA) will prioritise in 2024 and everything you need to know about...
We know that there’s a lot to come in the next twelve months. That’s why we asked a popular chatbot what it predicts to be the top 5 generative AI...
Adviser productivity
Cavendish Online, part of Lloyds Banking Group, has partnered with, the Artificial Intelligence fintech business, to become one of the first protection distributors in the market to use AI...
Financial Services
Nothing gets us through the day better than a podcast. That’s why we’ve put together this list of our top 5 financial services podcasts to add to your playlist for...
Artificial intelligence (AI) is transforming almost every sector of the world, and the finance industry is no exception. From robo-advisors to algorithmic trading to chatbots answering customer questions, AI is...
Artificial Intelligence (AI) has been a hot topic, not just in finance but in homes and businesses across the world. From whipping up long paragraphs in seconds to translating languages,...

Aveni’s platform uses the latest in NLP to transform productivity and risk oversight.

Scale compliance at a fraction of the cost

Cut financial advice admin from hours to minutes with Aveni’s AI assisitant

Aveni Assist

Get up and running with Aveni Assist and how it can help transform productivity and compliance. 

Aveni Detect

Get up and running with Aveni Detect and how it can help transform productivity and compliance. 

Read the latest articles from Aveni

Access our latest whitepapers, webinars, brochures and more

Jargon-bust your way to a better understanding of all things AI