Lloyds Banking Group has introduces an AI tool to aid customers in their investment decisions in a UK first, despite varying opinions on how AI should be regulated in the financial services sector.

The tool will be piloted with a small group of customers through the Scottish Widows pension and investment department, Lloyds told Reuters.

Importantly, Lloyds says that the tool only offers customers “guidance” rather than financial advice, which is more heavily regulated and must be bespoke to an individual’s finances and situation.

The tool sees a major UK bank leveraging AI to compete with competing wealth management funds offering financial advice.

Lloyds intends to widen the scope of the tool later in the year.

The bank is among eight organisations that will test “targeted support” using AI in the Financial Conduct Authority’s live testing programme, announced yesterday.

Targeted support is meant to be less comprehensive than full “advice” but is still regulated, and is meant to fill in an advice gap between often expensive financial advice and broader, vague ‘guidance’.

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AI’s use in financial services is not without risks, however, with the Banks of England keeping a close eye on how AI tools are rolled out across the sector.

The FCA is reviewing how AI could impact and transform financial services – will it democratise information, shift market dominance, or increase security risks?

Want to hear more about the AI’s impact on the financial sector? Join us out our Financial Services Technology Summit next week!