Global Trustee and Fiduciary Services Bite Sized Issue 12 2024

4 QUICK LINKS COSTS & CHARGES CSDR CRYPTOASSETS EMIR FINTECH FSB FUND LIQUIDITY MIFID II/MIFIR NBFI OPERATIONAL RESILIENCE SUSTAINABLEFINANCE/ESG T+1 ASIA NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 12 | 2024 FINTECH Research Note: AI in UK Financial Services On 21 November 2024, the Bank of England and the Financial Conduct Authority (FCA) published a report presenting their findings and analysis of the 2024 artificial intelligence (AI) in UK financial services survey. This survey builds on a range of joint work, including the: • 2019 and 2022 machine learning (ML) surveys; • Artificial Intelligence Public-Private Forum (AIPPF) final report (February 2022); • Discussion Paper DP5/22: ‘Artificial Intelligence and Machine Learning’ (October 2022); and • Wider domestic and international discussion about the use of AI in financial services. The report indicates: • 17% of firms are using AI. 10%more plan to in the next 3 years; • Foundation models (including large language models) make up 17% of AI use cases; • 33% of AI use cases are from third-parties; • 55% of AI use cases have some automated decision-making. Only 2% are fully autonomous; • 62% of AI cases are lowmateriality vs 16% high (as rated by firms); • The greatest perceived benefits are in data and analytical insight, AML and combatting fraud, and cybersecurity; • The greatest perceived risk is cybersecurity. Growing risks are third-party dependencies, model complexity, and embedded models; • 84% of firms have a person accountable for AI; and • 34% of firms have ‘complete understanding’ of the AI they use, 46% have a ‘partial understanding.’ Link to Report here European Commission Consultation on Guidelines on the Application of the Definition of an AI System and the Prohibited AI Practices Established in the AI Act On 13 November 2024, the European Commission’s European AI Office (the AI Office) launched a multi-stakeholder consultation on the application of the definition of an AI system and the prohibited AI practices established in the AI Act. This consultation is targeted to stakeholders of different categories, including providers and deployers of AI systems such as businesses, authorities (including local public authorities) and other organisations, academia and research institutions, trade unions and other workers’ representatives, civil society organisations, public supervisory authorities, and the public. The AI Office states that, as not all questions may be relevant for all stakeholders, respondents may reply only to the section(s) and the questions they consider relevant. Respondents are encouraged to provide explanations and concrete cases as part of their responses to support the practical usefulness of the guidelines. The questionnaire for this consultation is structured along two sections with several questions. 1. Questions in relation to the definition of an AI system, and 2. Questions in relation to prohibited AI practices. The targeted consultation is available in English only and will be open for 4 weeks starting on 13 November until 11 December 2024. Link to Consultation here