AI’s Influence on HR in the Financial Services Sector

Jan 15, 2024

Artificial Intelligence (AI) is poised to revolutionise the landscape of the UK financial services sector, presenting both opportunities and challenges for HR professionals in this sector. As the industry eagerly awaits anticipated regulatory guidance in early 2024, HR departments within financial institutions must proactively prepare for the profound impact AI is expected to have on their business functions.

Evolving Roles and Skill Sets

The integration of AI is set to transform traditional job roles and skill requirements within financial institutions. HR professionals should anticipate shifts in job functions, necessitating the development of new skill sets to navigate this technological evolution. As AI assumes routine tasks, employees will pivot towards roles requiring advanced analytical and problem-solving skills. HR departments must align training programs to equip employees with these in-demand skills, fostering adaptability and continuous learning.

It is also crucial that HR teams review and implement appropriate policies and procedures covering the use by employees of AI in their day to day job roles, the extent to which this is permitted and the risks and consequences of any misuse.

Adapting Recruitment and Talent Management

AI-driven tools are becoming instrumental in recruitment and talent management. Predictive analytics and AI-powered algorithms enhance candidate screening, streamline talent acquisition processes, and provide data-driven insights for better decision-making. HR teams should familiarise themselves with these tools to optimise recruitment strategies, ensure fair and unbiased selection processes, and harness AI’s potential to identify and retain top talent.

Depending on the nature of any AI adopted, HR teams would be well placed to consider any impact on how they process employee personal data and whether data protection policies, privacy notices or Data Protection Impact Assessments need to be review and updated or implemented.

Ethical AI Adoption and Diversity Considerations

With AI’s growing influence, ethical considerations take centre stage. HR plays a pivotal role in ensuring the ethical and responsible adoption of AI within financial services. Addressing bias in AI algorithms and promoting diversity and inclusion in AI-driven decisions are paramount. HR professionals must collaborate with AI development teams to establish frameworks that uphold ethical AI practices and mitigate biases, fostering fair and inclusive outcomes.

Training and Development in AI Ethics and Governance

As AI permeates various facets of financial services, HR departments should champion comprehensive training initiatives on AI ethics, governance, and compliance. Educating employees on the ethical implications of AI-driven decisions and fostering an understanding of regulatory compliance is crucial. HR’s role in aligning these training programs with evolving regulatory standards will be instrumental in ensuring a workforce well-versed in ethical AI practices.

Collaboration and Integration

Successful integration of AI necessitates cross-departmental collaboration. HR professionals must work closely with IT, compliance, and business development teams to seamlessly integrate AI while ensuring alignment with HR policies and regulatory requirements. Collaboration will be key in developing a unified strategy that balances innovation with ethical considerations.

The anticipated impact of AI on HR functions within the UK financial services sector signifies a transformative period. Embracing this evolution requires HR departments to prepare their workforce, adapt recruitment strategies, review internal policies and procedures, champion ethical AI practices, and collaborate across departments. By proactively navigating these changes, HR professionals can harness AI’s potential to drive innovation and foster a workforce ready for the AI-powered future of financial services.

If you would like further advice, please contact us to speak to a member of our Employment Team.

This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

Hannah King

Hannah King

Senior Solicitor, Employment Law
t:
 01189 899 707
e: hannah.king@herrington-carmichael.com

Alex Harper

Alex Harper

Senior Solicitor, Employment Law

t: 01276 854 925
e: alex.harper@herrington-carmichael.com

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