British Lender, Lloyds, Eyes Financial Advice Industry With AI-Powered Investment Tool
In Focus
- Lloyds is piloting its AI tool through its Scottish Widows Pensions subsidiary
- The AI-powered tool helps users make better investment decisions
- Lloyds is working with the FCA to test AI apps
Lloyds Banking Group has introduced an AI tool designed to help customers make better investment decisions. The launch of Lloyds’ AI investment tool is the first in the U.K. ‘s banking industry. The banking giant introduced the tool at the time when regulators are monitoring the impact of AI on the financial advice industry.
How Lloyds’ AI Investment Tool Works
Lloyds said it’s piloting its AI tool with a controlled group of customers in its Scottish Widows pensions and investments subsidiary. Through this pilot, the Lloyds AI tool is offering users investment guidance, as opposed to advice.
Guidance refers to broad, generic financial information. Financial advice, on the other hand, is information that is customized to an individual. Strict regulatory requirements are applied to financial advice.
According to Scottish Widows CEO, Chira Barua, Lloyds’ AI investment guidance enables customers to evaluate options without deciding for them. The British bank plans to expand the new product by the end of 2026.
Banks are Taking on Wealth Managers with AI
Application of AI in the financial advice industry appears to be the new battleground as British lenders take on specialist wealth managers that currently dominate the market. Already, Barclays, Lloyds, and HSBC have invested heavily in this industry.
The financial institutions are looking to expand their market share and revenue as lending income drops due to low interest rates. Previously, U.K.’s Financial Conduct Authority (FCA) has warned that adoption of agentic AI could create new risks for customers due to their ability to make decisions and act on their own.
Experts have also warned that AI application in the financial advice industry poses significant risks. They say algorithms might mis-sell products and amplify mistakes, leaving institutions in a situation where they cannot explain situations to customers or supervisors.
Some financial institutions like the Bank of England are monitoring AI roll out in the financial sector closely. Last year, the FCA partnered with NVIDIA to supercharge the AI sandbox, enabling banks to experiment safely with AI.
Lloyds is Testing AI Apps
As it pilots the AI investment tool, Lloyds is among three British banks that the FCA has authorized to test AI apps. Lloyds, Barclays Plc, and UBS Group AG will join the AI Lab Program at the FCA to help with risk assessment. The financial institutions will also create secure tools for markets and consumers without adhering to codified rules.
“We’re continuing to collaborate with firms to support the safe and responsible development of AI in UK financial markets,” FCA’s Chief Data, Information and Intelligence Officer, Jessica Rusu stated.
The banking institutions will also explore a range of models, including agentic AI in finance, and neurosymbolic AI that blend machine learning with structured reasoning.
