North American Financial Services Firms Lagging in AI Use, Report Finds

A new report from Global Relay reveals that while 72 percent of global financial services firms plan to introduce AI technologies within the next year, North American firms appear to be lagging behind that trend due to regulatory uncertainties – with 65 percent of them noting they do not have plans to use the tech over the next year.

The report, Industry Insights Report: Compliant Communication 2024, found that 42.6 percent of financial services plan to introduce AI in their compliance workflow. Still, the majority of respondents – 57.4 percent – do not intend to.

North American respondents were particularly reluctant to introduce the emerging technology this year, with only 34.1 percent planning on integrating AI solutions.

“Clearly, U.S. financial organizations have reservations about introducing AI practices into sensitive, oftentimes vulnerable, compliance programs. This may in part be a trickle-down effect of a cautious approach from U.S. regulators,” the report says.

While President Biden introduced his landmark AI executive order in October 2023, members of Congress have yet to introduce “one unified message or clarity of approach,” the report explains.

“The jury is still out in the U.S. regarding the efficacy of AI in financial services compliance,” said Chip Jones, executive vice president of compliance at Global Relay. “Before U.S. financial services firms fully embrace AI to assist with compliance, these firms will need to see definitive data that demonstrates that AI is in fact assisting in reducing the compliance burden.”

“Once U.S. financial services firms can clearly see the benefits of AI in the compliance space, and regulators have clarified recordkeeping and audit trail requirements, I think we will see adoption of AI in the U.S. financial services industry increase exponentially,” Jones added.

Additionally, the report notes that 65.2 percent of respondents said their biggest concern when ensuring compliance with electronic communication channels is “getting staff to comply.” This figure has increased by 3.7 percentage points, up from 61.5 percent in 2023.

“As regulatory scrutiny increases alongside stricter policies within firms, it is interesting to note that human behavior is becoming more of a concern than it was in the year prior,” the report says. “This is especially true given that regulators are at pains not only to take enforcement action against financial organizations, but against the non-compliant individuals within those organizations.”

The report also found that 79 percent of firms increasingly use communication surveillance technology to identify conduct and culture risks. When split by jurisdiction, this is much more prominent in global and North America-based firms.