Five Ways AI Will Impact The Financial Services Industry  

Nasir Zubairi, pictured, is CEO of the Luxembourg House of Financial Technology (Photo:

In its recent “The AI Revolution in Financial Services” report, Luxembourg-based market intelligence outfit Vital Briefing outlines the transformative power the technology will have for a financial centre like Luxembourg. 

As Luxembourg House of Financial Technology CEO Nasir Zubairi states in the report, “While AI can drive significant efficiencies in areas such as customer service and risk management, the actual value unlocked will depend on how seamlessly these technologies are integrated, and the regulatory landscape they operate within.”

Indeed, questions abound when it comes to AI, but here are some of the ways it’s expected to transform the industry. 

Dealing with vast amounts of data

As Vital Briefing notes, machine learning is not just a “key tool for fraud detection in lending, it [also] extends throughout financial institutions’ activities by its ability to sift vast amounts of transaction data to detect unusual patterns that may indicate suspicious activity and possibly fraudulent transactions,” and the authors consider whether the technology could be the “silver bullet for the KYC/AML roadblock”.  

While decision-making challenges could be alleviated with AI, and the technology can outperform human decisions when it comes to investments, for instance, deepfakes are increasingly difficult to detect and caution is necessary.

Other gains in efficiency

Whether it’s making the collection of documentation more efficient or allowing customer service to make efficient strides, AI systems are expected to ease certain burdens. The report indicates that regulators are also taking note of this, with efforts in various markets already underway to determine how the technology can help tackle fraud or improve payment systems, for example. 

Reducing the skills gap

Discussions around AI often centre on what degree AI could take over certain jobs and its influence on scalability. Companies like PwC Luxembourg are among those to have invested in exploring the technology, with its Deputy Managing Partner Olivier Carré quoted in the report as saying, “If we could free up some of this brainpower to perform higher added-value tasks, this should be beneficial for the overall resource situation in Luxembourg.”

Areas like customer service can benefit, for example, in filtering the more mundane tasks. AI nevertheless still requires human oversight, which will also require specific skill sets. 

Improvements for customers

The promise of faster payment systems or more personalised products would ultimately serve to benefit customers. Yet with this comes the “broader imperative of transparency and honesty in the interaction between clients and institutions,” the authors note, citing Zubairi: “The tension between privacy rights and the benefits of data access is palpable. While AI models thrive on vast data sets, it’s crucial to ensure that individuals’ rights aren’t compromised.”

Driving sustainability

The report authors call the intersection of AI and ESG an “uneasy” one: while AI will undoubtedly lower climate finance barriers and enhance related insights, once again able to sift through vast amounts of data, here once again it will be crucial to have human input. As Softbrik co-founder Romit Choudhury adds: “I expect internet-of-things tracking of emission data and peripheral processes like carbon accounting to become more transparent first before our models’ confidence levels are reasonable enough to fact-check carefully manipulated exaggeration.”

The full report is available for download via the Vital Briefing website

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