The impact of machine learning on UK financial services

Bonnie G Buchanan; Danika Wright

doi:10.1093/oxrep/grab016

The impact of machine learning on UK financial services

Oxf Rev Econ Policy. 2021 Sep 23;37(3):537-563. doi: 10.1093/oxrep/grab016. eCollection 2021 Fall.

Authors

Bonnie G Buchanan¹, Danika Wright²

Affiliations

¹ Surrey Business School, University of Surrey, UK.
² Discipline of Finance, University of Sydney, Australia.

Abstract

Machine learning is an increasingly key influence on the financial services industry. In this paper, we review the roles and impact of machine learning (ML) and artificial intelligence (AI) on the UK financial services industry. We survey the current AI/ML landscape in the UK. ML has had a considerable impact in the areas of fraud and compliance, credit scoring, financial distress prediction, robo-advising and algorithmic trading. We examine these applications using UK examples. We also review the importance of regulation and governance in ML applications to financial services. Finally, we assess the performance of ML during the Covid-19 pandemic and conclude with directions for future research.

Keywords: AI; big data; financial services; machine learning.