Financial Business Leaders Struggle to Keep Pace With AI, Report

A new report from law firm Mayer Brown has found business leaders in the financial services sector are concerned about being outpaced by AI developments.

Mayer Brown’s The Next Organization surveyed 635 financial services business leaders, including 535 C-suite and senior executives, from Europe, Asia-Pacific and North America. The survey also sought insights from executives working in other sectors like financial services, energy and manufacturing.

The report found that seven in 10 executives are worried their firms are being eclipsed by AI developments, with almost two-thirds (64%) admitting that their companies need a complete digital transformation.

Despite recognizing a desire for change, the report found that businesses are blaming current market conditions for impacting their efforts, with 68% saying it’s creating challenges to achieving business transformation goals.

In the financial sector, Mayer Brown’s survey found that over two-thirds (68%) of financial institution leaders say their organizations are not transforming fast enough, compared with 62% of investment firms.

Credit: Mayer Brown

The report found that investment firm leaders were the most likely to express concern about technological changes, with 75% admitting to feeling overwhelmed.

Despite concerns, few businesses seem to have a plan in place. Mayer Brown found that fewer than one-third of surveyed business leaders believe they have a sufficiently clear and future-ready strategy in place for AI.

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Some 65% of financial institutions and 67% of investment firms have AI strategies that only look 12 months ahead.

The report suggests that the lack of a clear strategy is due to business leaders focusing on short-term issues that they believe prevent them from focusing on more strategic transformation initiatives. 

Lauren Pryor, who co-leads Mayer Brown’s financial services product team, suggested that the lack of existing AI capabilities will be a driving factor behind merger and acquisition activity over the next few years.

“AI is quickly reshaping the business landscape and there is clear recognition among financial services leaders of the critical role of technology in their transformation efforts – many are reexamining their business strategies and asking how could AI transform my company?” Pryor said. “In addition, businesses are expressing a desire for more support. Acquisition growth can quickly bridge the knowledge gap and help our clients stay ahead of the curve.”

For companies seeking to get a foothold in AI, geopolitical considerations were high on the list of potential issues. Some 84% of investment firm leaders said geopolitical agility will be critical for organizations to expand internationally, the highest of any sector.

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Reacting to regulatory developments, especially in areas like cybersecurity, was also identified as a potential headache for firms looking to adopt or acquire their way into AI. The report suggests businesses could “find themselves in a constant state of reaction, creating a whiplash dynamic” and thereby impact their ability to think long-term.

“Anticipating what might come next is crucial for leaders, who need to be able to evaluate and predict potential threats, both internal and external and current and emerging and to develop robust strategies to mitigate and potentially capitalize on these risks,” said Megan S. Webster, a partner in Mayer Brown’s litigation and dispute resolution team.