Artificial intelligence is set to fundamentally change the retail financial services sector, according to a new report from the U.K.’s Financial Conduct Authority. The regulator predicts that AI tools will help close the “advice gap” and become a defining feature of the industry over the coming years.
The central shift, according to the report, is moving from human-led, episodic financial activity toward services that are AI-enabled, continuous and delegated. This change will affect how products are designed, distributed, monitored and governed across the market.
The review, led by Sheldon Mills, the FCA’s executive director, is based on consultations with the financial industry, trade groups, tech firms and international stakeholders. It also includes a survey of more than 5,000 financial services consumers and focus groups.
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Research indicates a growing appetite for autonomous AI tools among retail investors. About 26% of investors trust public AI tools, such as ChatGPT, Claude or Gemini, for financial advice, though many do not understand that traditional investor protections do not apply to this type of interaction. Looking ahead, 20% of consumers said they are likely to use AI that can act autonomously within pre-set parameters.
Despite the enthusiasm, the report highlights significant concerns regarding trust and oversight. The technology could amplify conduct, concentration and cyber risks. Consumer research found that trust, control and access must be addressed before widespread adoption of AI finance agents occurs.
Risks of Automation
For firms, the rollout of tools with greater autonomy will change the role of industry personnel. The function is expected to shift from operators close to each decision to collaborators, approvers and, eventually, observers who monitor outcomes and step in when systems move outside agreed parameters.
At the firm level, powerful AI could lower barriers to entry, enable new distribution channels and allow digital-native firms to scale rapidly. However, control of AI-driven customer relationships may become a major source of market power. As consumers rely on agents to search, compare and transact, the owner of that AI layer may influence which products are visible, how choices are ranked and where value is captured, shifting the customer relationship away from financial services providers.
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It is a pattern that mirrors the early days of the internet banking boom, when the gatekeepers of information held outsized power over the customer relationship. In those instances, the entity controlling the portal dictated what was available to the user, a dynamic that appears poised to return in a more sophisticated form through AI agents. This structural shift suggests that future competition in financial services may depend less on the product itself and more on who controls the algorithmic gateway to the consumer.
A Roadmap for Regulation
To prepare for the looming AI revolution, the report calls for the regulator to enable the foundations for agentic finance. It recommends building an AI-enabled agentic supervisory model and developing an AI-enabled service for enhancing financial capabilities.
“Artificial intelligence will transform financial services by 2030,” Mills said in a release. “This report sets out a roadmap for how industry regulators and government can prepare for the next phase of AI-driven change in our world-leading financial services sector.”
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