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AI, in its many forms, presents both exciting commercial potential and significant risks, according to a senior financial services lawyer.
“There’s [an] increasing appetite for clients to use the latest technology to significantly transform their business”, according to partner in Mills Oakley’s national financial services team, Zein El Hassan, who has seen how automation, digitisation, data analytics, and AI can be harnessed in the sector.
AI is the latest, but not the first, technology to seemingly replace humans, with the 1990s experiencing internet banking for the first time and the 2010s introducing mobile banking – so it is natural that questions arise about where and how safely it can be used.
On this, El Hassan said: “The potential business use cases keep climbing as new technology hits the market each week. While this provides enormous commercial opportunities for our clients, it also heightens our collective responsibility to make sure it doesn’t cause significant consumer harm, and land our clients in court.”
Seeing the transformation of financial services through capabilities in real-time and personalised conversations with customers, digitisation of products and services at scale, and the automation and uplifting of operational processes, El Hassan identified improved risk management as “one of the most compelling reasons for financial services businesses to adopt new technology”.
He said: “Manual processes – no matter how experienced the team – are error-prone, unscalable, and difficult to monitor and audit. They are riddled with risk.”
However, “tech-enabled products, services and operational processes, with appropriate human oversight, can generally be designed, tested and deployed in a manner that results in better risk management”.
According to El Hassan, the nature and limitations of AI, as well as its generative and agentic forms, mean it does not solve every one of these problems. Regarding high judgement-based activities, for example, AI can be unreliable and not capable of generating complex financial advice.
El Hassan furthered: “While there are great expectations around its ‘creative’ ability, it has some well-documented limitations, such as its intentional, built-in tendency to make things up to fill in information gaps and provide accommodating answers.”
It is key, he continued, not to see AI as the answer to every problem, but rather “one of a multitude of tech-enabled solutions that can be used in conjunction with human input and oversight to enhance the customer journey, improve the user experience, and uplift operational processes”.
“When an AI-driven workflow process is designed, tested, and deployed appropriately, the process can be as trustworthy, accessible, and uncontroversial as mobile banking,” he said.
This can be seen, El Hassan said, in the growing capabilities of the AI chatbot not only to reliably help customers understand financial advice but also to build trust over time.
The role of professional advisers during times of technological deployment, he continued, is crucial to helping clients manage risks and to the tech-led transformation of financial services as a whole. As such, a deep knowledge of laws and regulatory requirements, and experience in different financial products, services, and operational processes is crucial to deliver the required degree of support.
“In these tech-driven transformations, it is also important to have a proficient understanding of the functionality, workings, and limitations of the new technology,” El Hassan said.
“Working together with internal and external managers, advisers and experts, our objective is to give senior management and the board confidence that the tech produces outputs that are correct, complete, and legally compliant, is deployed in a way that does not mislead consumers, and is monitored with appropriate human oversight to make sure it doesn’t come off the rails.”
Regarding challenges within the fast transformation of the financial services sector, El Hassan cited an increasing sense of urgency to harness its full potential ahead of competitors while exercising internal risk aversion as key.
Both challenges, he continued, can be managed by having “the right expertise working together at the right points in time” and knowing when to bring in this team. Giving experts the space to explore possibilities within governance and legal guardrails may, he said, give some surprising results.
El Hassan said: “Recently, I worked with a team of AI experts with no financial services legal expertise, who built a centrally governed multi-agent workflow that produced an incident assessment report for ASIC breach reporting purposes that was genuinely amazing. The design was different, and the output was better than anything I’d seen before.”
Compliance testing and customising to the client’s obligations and procedures by internal and external experts should be conducted in a way that is coordinated and well documented so it may be independently verified, he continued. Done properly, the outcome will be an optimised and reliable end-to-end process that ticks all the boxes.
El Hassan said: “We now have the tech, expertise and consumer expectation that financial products and services will become as accessible and as easy to use and reliable as mobile banking. Our role as professionals is to work together with other experts to make this happen.”
“So, it’s an exciting time to be a lawyer or strategic adviser in financial services.”
Amelia is a Professional Services Journalist with Momentum Media, covering Lawyers Weekly, HR Leader, Accountants Daily and Accounting Times. She has a background in technical copy and arts and culture journalism, and enjoys screenwriting in her spare time.
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