Financial Services Sector Calls for AI and ESG Regulations to Unlock Full Potential

The financial services sector is calling for clearer and proportionate regulations on artificial intelligence (AI) and environmental, social, and governance (ESG) to fully harness their benefits, according to new findings from global law firm DLA Piper, as outlined in The Fintech Times. 

In their report, «Financial Futures: Disruption in Global Financial Services,» DLA Piper reveals that optimism is strong among financial institutions, with UK and US organizations expressing high confidence in the industry’s growth prospects. Notably, advancements in technology (71%), new products and services (55%), and changing consumer and investor behaviors (38%) are the main drivers of optimism. However, complex regulations remain a challenge for 58% of respondents, and 73% believe these regulations stifle innovation efforts.

AI’s role in transforming financial services is widely acknowledged, with 86% of respondents expecting significant impacts. However, 53% also consider AI a major challenge. Notably, only 39% are actively hiring AI experts or establishing governance structures, and only 56% are developing ethical frameworks for AI use. As Mark Dwyer, global co-chair of the financial services sector group at DLA Piper, explains, «It is vital for businesses to have a clear plan and direction in place before they start their AI journey.»

Regarding ESG, 46% of firms aim to position themselves as sustainability leaders, but regulatory complexity creates hurdles. More than half of respondents want further ESG regulation to help meet objectives, and concerns about non-compliance are the biggest drivers for ESG efforts. As Dwyer puts it, «Both ESG and innovation will be key to business success long into the future.»