LONDON—Machine learning (ML) tools are now in use at two-thirds of U.K. financial institutions, with the technology entering a new phase of maturity and more advanced stages of deployment, according to a survey conducted by the Bank of England.
The central bank and regulator FCA surveyed firms about the nature of deployment of ML – defined as “the development of models for prediction and pattern recognition, with limited human intervention” – the business areas where it is used and the maturity of applications. It also collected information on the technical characteristics of specific ML use cases. Those included how the models were tested and validated, the safeguards built into the software, the types of data and methods used, as well as considerations around benefits, risks, complexity and governance, Finextra explained.
The poll was sent to almost 300 firms, including banks, credit brokers, e-money institutions, financial market infrastructure firms, investment managers, insurers, non-bank lenders and principal trading firms, with a total of 106 responses received.
Live ML Applications
It found that two-thirds of respondents report they already use it in some form. The median firm uses live ML applications in two business areas and this is expected to more than double within the next three years.
"In many cases, ML development has passed the initial development phase, and is entering more advanced stages of deployment," the Bank of England stated. "One-third of ML applications are used for a considerable share of activities in a specific business area."
From front-office to back-office, ML is now used across a range of business areas, the survey found, with most common applications in anti-money laundering and fraud detection as well as in customer services and marketing. Some firms also use ML in areas such as credit risk management, trade pricing and execution, as well as general insurance pricing and underwriting, Finextra explained.