European fintechs slow AI adoption amid regulatory and quality concerns
Europe's fintech sector is reassessing its rapid adoption of generative AI as companies face regulatory hurdles and quality issues in financial services.
Europe's fintech sector is rethinking its enthusiasm for generative AI as companies acknowledge the technology's limitations in financial services. Despite attracting nearly €2bn in VC funding for AI agent startups, including those specializing in financial services, a shift in attitude is underway.
Klarna's AI Backtrack
Klarna CEO Sebastian Siemiatkowski admitted the company over-relied on automation, leading to lower-quality customer service. While Klarna denies dialing down AI use, it now emphasizes the importance of human support for complex cases.
Regulatory Challenges
Fintechs face unique hurdles in AI adoption due to strict financial regulations. Starling Bank CIO Harriet Rees stresses maintaining human-run customer service, stating: "We won't compromise on that." The UK's Financial Conduct Authority requires fintechs to prove they're delivering "good outcomes" for customers.
Cost vs. Quality
Investor Elina Rayberg notes AI isn't reducing costs but shifting them to infrastructure and compliance. An IBM survey found only 25% of AI initiatives delivered expected ROI. Starling CFO Declan Ferguson warns: "You can't cost cut your way to growth."
Cautious Product Development
Fintechs are still developing AI tools but at a slower pace:
- Starling launched Spending Intelligence for financial queries
- Bunq and Lunar rolled out AI financial assistants
- Revolut is hiring for AI solutions
Primer CEO Gabriel Le Roux emphasizes careful testing: "Trust takes years to build, and seconds to lose."
Read the original article: Europe's fintechs hit pause on AI rollout
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About the Author
Michael Rodriguez
AI Technology Journalist
Veteran technology journalist with 12 years of focus on AI industry reporting. Former AI section editor at TechCrunch, now freelance writer contributing in-depth AI industry analysis to renowned media outlets like Wired and The Verge. Has keen insights into AI startups and emerging technology trends.