Lloyds pilots AI investment guidance tool as UK regulator studies impact

Lloyds Banking Group has become the first UK lender to introduce an artificial intelligence tool to help customers make investment decisions, even as AI's impact on the tightly regulated financial advice industry comes under scrutiny.

The British bank told Reuters it was piloting the AI-powered tool with a small group of customers through its Scottish Widows pensions and investments ‌arm, offering what ⁠it ⁠describes as investment "guidance" rather than advice. The product is expected to be widened later this year.

The move ​to harness AI is the latest initiative in efforts by British lenders to compete against ​specialist wealth managers that dominate the financial advice market.


HSBC, Barclays and Lloyds have all increased investment in this sector, looking to win market share and expand their fee-based ​business as lending income is hit by low interest ⁠rates.

Scottish Widows ‌Chief Executive Chira Barua said the tool would act "like a ​satnav for ​investments", helping customers to navigate options without making decisions for them.

The ⁠distinction matters. Guidance is broad and generic while financial advice ​must be tailored to an individual and is subject to ​far stricter regulatory requirements.

Experts say the use of AI to provide advice is not without risk and raises concerns that algorithms could amplify mistakes, mis-sell products and leave companies unable to explain advice to customers or supervisors. The Bank of England is also closely watching how AI technology is rolled out.

Separately, the ‌Financial Conduct Authority (FCA) said on Tuesday that Lloyds was among eight institutions, including Barclays, UBS and Experian, that will test AI-enabled "targeted support" in ​its live testing ​programme.

Targeted support is ⁠a newly created regulated activity that offers a deliberately lighter touch than full advice and is central to the regulator's efforts to close an advice gap in which a ​growing number of people are unable to afford or access personalised financial advice.

The FCA has launched a review into how AI could reshape financial services, including whether the technology could shift market power away from regulated financial firms and towards companies that control consumer interfaces and data.