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Report: AI Ethics and Governance is Heralding a New Era for Financial Services

Report: AI Ethics and Governance is Heralding a New Era for Financial Services

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Artificial intelligence (AI) is driving change across almost every major industry today. Worldwide spending on AI is expected to reach US$110 billion by 2024, the International Data Corporation predicts. One of the biggest spenders will be financial services, a key sector in Temasek’s investment portfolio.

As a generational investor, Temasek is building AI capabilities to not only drive better business outcomes in our ecosystem, but also shape a better world. To do so, AI solutions must be responsibly designed, developed and deployed.

Financial services is a sector that can expand economic opportunity while meeting societal needs. According to a McKinsey study, AI solutions could add an additional US$2 trillion of annual value for banks and insurance companies globally.

With the right strategy, financial services firms — namely banks and insurance companies — can unlock the full potential of responsible AI, reinventing the way they meet the needs of society and power economic growth.

To understand the current state of AI Ethics and Governance in financial services, Temasek conducted a survey with 39 decision makers from the US, Europe, Singapore and Hong Kong on an anonymous basis in March 2021. The survey focused on AI adoption and governance within banks and insurance companies, and featured decision makers who are involved in AI strategy, adoption and governance in the sector. Temasek also conducted interviews with leading industry experts to gather their thoughts on the role of AI Ethics and Governance in financial services.

The findings and insights were used for this report. It explores how AI governance can accelerate the trusted and responsible deployment of transformative AI-powered solutions in the industry.

Key findings in the report include:

  • Contrary to the popular belief that regulation hinders innovation, 3 in 4 financial services companies said they would appreciate clear regulation and standards on the use of AI.
  • Trust is a must in financial services. An overwhelming 93% of companies demand that AI solutions be trustworthy.
  • While all financial services companies use AI in their processes in some way, differences exist in the extent of the deployment of AI. Only 13% are AI leaders — companies that are effectively using responsible AI in most of their processes to create value.
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