This March saw regulators approve the UK’s first fully AI-powered law firm.[1] AI is disrupting industries, reshaping traditional business models and streamlining operations in unprecedented ways. Always predicted to be transformative, safety concerns have dominated the narrative on AI in recent years and led to some resistance to adoption in tightly regulated sectors. At Amadeus we see this beginning to change with the startups we are backing increasingly gaining customers among these harder to reach parts of the public and private sectors.
This is to be welcomed. While there needs to be vigilance around governance and data management, we strongly believe that AI can reduce risk by improving compliance, detecting anomalies and safeguarding privacy.
In regulated sectors like insurance, which rely heavily on legacy technologies, AI’s ability to detect patterns better than humans is already having a major impact on fraud prevention. By automating anomaly detection, AI reduces the likelihood of error by human auditors and increases the accuracy of compliance monitoring. This approach helps prevent risks before they escalate, potentially saving companies millions.
The logistics sector also greatly benefits from AI by enhancing planning and operational efficiency. AI algorithms can predict factors that may affect transportation and demand with impressive accuracy by combining real-time data with historical trends, allowing for more accurate movement across supply chains.
In the law, new large language models (LLMs) have become incredibly good at matching individual cases to legislation to give a view on whether the case complies with the regulation. In straightforward cases, AI may be able to make a call on how it could be judged once given the right information. This is not to say that AI can do the job of a lawyer but rather assist in pulling relevant historical data and case rulings to help make a judgement call quicker. The more complex cases will still need input from professionals with specialist knowledge.
Another key area where AI can be helpful is with redacting sensitive information in media files. This work can often be intense and arduous and there are now AI companies making it possible to analyse and act on sensitive data without compromising individual privacy or regulatory standards.
In 2017, the Accelerated Capability Environment (ACE) became a part of the UK Home Office. ACE was created to address the challenges posed by rapidly evolving digital and data technologies in public safety and security. AI is being used by the Home Office to help keep up with the growing demands that come with maintaining law and order in an increasingly digitised world.
In March 2024, the UK government commissioned ACE to conduct a market review of existing multimedia redaction tools. The objective being to leverage cutting-edge technology, including artificial intelligence and machine learning, to achieve substantial efficiency gains.[2] Given that governments are among the most scrutinised and regulated institutions in any country, the responsible use of AI in this context is more likely to reduce risks than introduce them.
The benefits of AI in highly regulated environments are immense. A common fear is that AI will replace humans but in practice, AI is being deployed as a supportive tool that makes human work easier and more productive. People are still needed to provide oversight, governance and error detection. Responsible scaling, not rapid adoption, is the path to real impact. By embracing AI as an enablement and resilience tool, we can reduce risks and drive progress, paving the way for a safer and more efficient future.
Nick Kingsbury, partner at Amadeus Capital Partners
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