AI in Financial Services: How HR Can Prepare Financial Services Teams for Ethical AI Adoption 

Generative AI in financial services can be used to automate tasks like fraud detection, customer support, and document processing. Customer support is ubiquitous across industries. If you ever come across a chatbot on a website, that support feature is backed up by generative AI. On top of that, AI can also summarise reports, generate reports, and support decision-making. 

This forms the basis for a wider trend of AI and automation in financial services. Large financial institutions are implementing AI to streamline certain operations and reduce manual workloads. Any functions related to data processing and reporting can be enhanced with generative AI. However, it should always be checked by a professional. 

In banking and insurance, AI is already helping teams prioritise credit files, flag compliance risks, and improve customer response times. 

The opportunity is clear. But so are the risks. Without the right guardrails, AI can introduce bias, reduce transparency, and create compliance gaps. 

The financial sector is reporting significant changes in several areas, as reported by the Lloyds Banking Group: 

• Productivity gains reported by firms due to AI (past 12 months) - 59% 
• % saying AI enhances customer/client experience – 33% 
• % using AI to derive deeper customer insights – 33% 
• % saying AI is directly driving business growth – 21% 

The AI Act may classify many financial services applications as high-risk. This includes systems used in credit scoring, hiring, and customer profiling. HR teams need to understand how these rules apply to their tools and processes. 

Key risks include: 

AI bias in financial services: If training data reflects existing inequalities, AI systems can reinforce them. This affects hiring, promotions, and even customer segmentation. 

AI governance in financial services: Without clear oversight, it’s difficult to track how AI systems make decisions or who is accountable for them. 

Data privacy and compliance: AI systems often rely on large datasets. Under GDPR and FCA rules, firms must ensure data is handled lawfully and transparently. 

A CIPD survey commissioned for the CIPD Good Work Index found that 31% of employees feel financial stress affects their performance. Among lower earners, this figure is even higher. When AI is used in areas like payroll or performance management, transparency becomes essential to maintaining trust. 

HR teams are in a strong position to guide ethical AI adoption across financial services organisations. Their cross-functional role gives them visibility over people, processes, and systems. As AI becomes more embedded in recruitment, performance management, and workforce planning, HR teams can ensure these tools are used responsibly and in line with regulatory expectations. Oli Quayle, AI Evangelist at The Access Group, explains the security and ethical bias of utilising AI: 

“Technology can absolutely help organisations move forward, but it all comes back to something we’ve said a few times: your AI system must be secure and trustworthy. That means it should be company-secure - ringfenced so that it’s used only within your organisation and not training external models. It also needs to be role- and permission-based, ensuring that only the right people can access the right information. And finally, it must be personally private. You need to know that no one is monitoring what individuals are asking or doing within the system. That level of trust is essential. These are the basics, and your AI supplier must meet all of them. But we as humans also have a role to play. Regardless of your position, it’s about being a responsible part of the employment cycle. AI will always carry some level of bias, and as it continues to evolve, we need to stay involved, testing and guiding it to ensure it works ethically and effectively.” 

Episode 8: Supercharge talent & drive performance of our Do the Best Work of Your Life series 

Building AI literacy across the workforce

One of the first steps HR can take is to build AI literacy across the organisation. Many employees are unsure about what AI can do, how it works, or how it might affect their roles. HR can address this by developing training programmes that explain AI in practical, accessible terms. These sessions should cover the basics of how AI systems operate, their limitations, and the importance of human oversight. 

HR teams can use tools like our Training Needs Analysis Template to identify knowledge gaps and tailor AI training programmes that build confidence and capability across the organisation. 

Internal communications channels and learning platforms can be used to share real-world examples and case studies, helping to demystify AI and reduce anxiety. Special attention should be given to teams most likely to be affected by AI-driven changes, such as compliance, customer service, and operations. These employees need to understand how AI will support their work and where human judgement remains essential. 

CIPD Chief Executive Peter Cheese has this to say on the adoption of AI in ‘AI use in the workplace: Practical advice for HR professionals’: 

“AI is now evolving rapidly, and much is being speculated about its potential and uptake across sectors, organisations, and jobs [...] Now is the time for organisations to learn, experiment and innovate, to understand both the potential benefits to people, jobs, and business outcomes, but also to understand the risks [...] We need to ensure a just transition through this time of significant change.” 

Embedding AI governance into HR processes

HR also plays a key role in embedding governance into the use of AI. This starts with developing clear policies that outline how AI should be used in people management. These policies should define acceptable use cases, set boundaries, and establish accountability for AI-driven decisions. 

Collaboration with legal and compliance teams is essential to ensure alignment with the AI Act and other relevant regulations. Together, these teams can create frameworks that balance innovation with risk management. HR systems can support this by tracking employee participation in AI training, monitoring policy acceptance, and flagging areas where further guidance may be needed. 

Addressing AI bias and inclusion in AI systems

Bias in AI systems is a significant concern, particularly in areas like recruitment and performance evaluation. HR must take proactive steps to identify and address these risks. This includes auditing existing AI tools to assess whether they produce fair and equitable outcomes across different demographic groups. 

Working closely with DEI teams can help ensure that the data used to train AI systems is representative and inclusive. HR should also promote transparency by clearly communicating how AI tools are used in decision-making processes. When employees understand how algorithms influence outcomes, they are more likely to trust the systems and engage with them constructively. 

Hayfa Mohdzaini, Senior Policy and Practice Adviser for Technology at CIPD, stressed the following in response to the Government's launch of the AI Opportunities Action Plan: 

“We found that 6 in 10 respondents would trust AI to inform, but not make, important decisions at work [...] Organisations should foster a culture of cross-team collaboration, helping employees develop their skills or reskill as necessary to ensure no one gets left behind as AI transforms workplaces and careers.” 

There is already a precedent for reskilling and redeploying, as indicated by Gartner in ‘9 Future of Work Trends for 2025’: 

• 27% redefined job roles or skills due to AI 
• 24% redeployed employees 

Organisations will have a responsibility to support their employees as AI gets more and more embedded in daily practices and processes. 

Inclusive AI starts with inclusive data. Explore how financial services firms are tackling this in our blog on diversity and inclusion in financial services. 

HR platforms are evolving to support ethical and compliant AI use. Access PeopleXD Evo integrates AI features that help HR teams manage risk, improve decision-making, and streamline operations. The platform includes predictive analytics for workforce planning, automated alerts for compliance, and tools to support fair and consistent decision-making. 

Take, for example, Cineworld. As a large UK retailer, they were keen to systemise scheduling across a large workforce and many locations. With PeopleXD Evo, Cineworld were able to: 

"Take a task that took six hours to write a roster now takes less than 60 minutes. It’s not very often we get the chance to hand back five hours to every senior manager every week." 

PeopleXD Evo also enables HR teams to track training, monitor policy engagement, and maintain audit trails, which form key components of effective AI governance. These features help ensure that AI is used responsibly and in line with both internal policies and external regulations. 

The benefits of AI in financial services HR functions are already becoming clear. AI can speed up routine processes such as onboarding, payroll, and compliance checks, reducing administrative burden and freeing up time for more strategic work.

Self-service tools powered by AI can also improve the employee experience by making it easier to access information, submit requests, and receive support. In addition, predictive analytics can help HR teams anticipate workforce trends, identify potential retention risks, and plan more effectively for future needs. 

As AI takes over repetitive tasks, HR can focus more on wellbeing initiatives. Wellbeing is a key priority in high-pressure sectors like finance. Learn more in our blog on addressing burnout in financial services. 

These improvements not only increase efficiency but also support a more agile and responsive HR function. Financial institutions are seeing measurable improvements through AI implementation: 

• Bain & Company report that financial services firms saw 20% productivity gains in areas including software development and customer service after adopting generative AI. 

However, there is also trepidation and issues with implementation: 

• 67% of workplaces had not delivered any training on AI. That suggests room for HR to deliver value via literacy/training.   
• Only 11% of organisations believe leadership is fully equipped for an AI-driven world. (CIPD, HR Practices in Ireland report 2025) 

To prepare for the future, HR teams need to take a proactive approach. This begins with a thorough review of current systems and policies to identify where AI is already in use and where additional safeguards may be needed. From there, HR can work with other departments to establish cross-functional AI steering groups that oversee adoption and ensure alignment with organisational values. 

Ongoing monitoring is also essential. HR should regularly assess how AI tools are performing, gather feedback from employees, and adjust policies as needed. This helps ensure that AI adoption remains ethical, transparent, and responsive to the needs of the workforce. 

HR teams play a critical role in how AI is introduced and managed across financial services. Their work influences how policies are written, how employees are trained, and how systems are monitored. This makes HR a key driver in ensuring AI is used in a way that meets both ethical expectations and regulatory requirements. For a broader view of how HR is driving transformation across the sector, read our blog on the role of HR in transforming financial services. 

To support this, HR leaders need the right tools. Access PeopleXD Evo brings together HR, payroll, talent, and analytics in one platform. Our suite solution includes AI features that help teams monitor compliance, track training, and surface workforce insights. These capabilities make it easier to manage risk, improve accuracy, and maintain visibility over how AI is being used. 

PeopleXD Evo also supports employee self-service and automates routine tasks, helping HR teams focus on strategic priorities. With built-in audit trails and policy tracking, it provides a strong foundation for AI governance and responsible adoption. 

If you're exploring how to prepare your organisation for AI, or want to strengthen your current approach, PeopleXD can help. 

Watch a 4-minute demo to see how the platform works in practice. 

Book a live demo to explore how PeopleXD can support your HR strategy.