Innovation constraints in AI regulation: perceptions of financial sector professionals and strategic reorientation

Purpose The purpose of this study is to investigate how financial professionals perceive innovation constraints imposed by emerging artificial intelligence (AI) regulation and how these perceptions influence their strategic reorientation within financial institutions. The focus is on regulatory barriers and reshaping financial innovation, risk posture and compliance strategies. Design/methodology/approach This study used a cross-sectional design. The initial quantitative phase involves a sample of 250 participants who have expertise in financial markets, AI development and organizational innovation. To analyze this data, a partial least squares structural equation modeling was used to test the hypothesized relationships between the constructs. Findings The results show that financial professionals perceive AI-related innovation constraints as regulatory burdens that vary across sub-sectors within the financial sector. These constraints drive a strategic reorientation, encouraging organizations to prioritize investments toward compliance-focused tools rather than customer-facing AI. Furthermore, perceived innovation constraints strongly predict investment in compliance-oriented tools and strategic reorientation, while its effect on the adoption of frontier AI technologies is comparatively weaker and strategically marginal. Originality/value The study provides empirical evidence on how constraints on AI-related innovation influence strategic decision-making in the financial sector. The study’s findings are derived from an analysis of professionals’ perceptions on AI regulation shaping organizational capabilities and the influence of strategic reorientation.

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Publication Details

Journal
Journal of financial reporting & accounting
Published
2026-04-25
DOI
https://doi.org/10.1108/jfra-07-2025-0606
Primary Topic
Ethics and Social Impacts of AI
Type
article
Field-Weighted Citation Impact
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article

Innovation constraints in AI regulation: perceptions of financial sector professionals and strategic reorientation

David Pascoal Rosado, Ana Gandrita, Daniel Mandel Gandrita
Journal of financial reporting & accounting
Ethics and Social Impacts of AI
article

Innovation constraints in AI regulation: perceptions of financial sector professionals and strategic reorientation

David Pascoal Rosado, Ana Gandrita, Daniel Mandel Gandrita
article en

Abstract

Purpose The purpose of this study is to investigate how financial professionals perceive innovation constraints imposed by emerging artificial intelligence (AI) regulation and how these perceptions influence their strategic reorientation within financial institutions. The focus is on regulatory barriers and reshaping financial innovation, risk posture and compliance strategies. Design/methodology/approach This study used a cross-sectional design. The initial quantitative phase involves a sample of 250 participants who have expertise in financial markets, AI development and organizational innovation. To analyze this data, a partial least squares structural equation modeling was used to test the hypothesized relationships between the constructs. Findings The results show that financial professionals perceive AI-related innovation constraints as regulatory burdens that vary across sub-sectors within the financial sector. These constraints drive a strategic reorientation, encouraging organizations to prioritize investments toward compliance-focused tools rather than customer-facing AI. Furthermore, perceived innovation constraints strongly predict investment in compliance-oriented tools and strategic reorientation, while its effect on the adoption of frontier AI technologies is comparatively weaker and strategically marginal. Originality/value The study provides empirical evidence on how constraints on AI-related innovation influence strategic decision-making in the financial sector. The study’s findings are derived from an analysis of professionals’ perceptions on AI regulation shaping organizational capabilities and the influence of strategic reorientation.

Journal of financial reporting & accounting
Portuguese Military Academy (PT), Iscte – Instituto Universitário de Lisboa (PT), Universidade Lusófona (PT)
Industry, innovation and infrastructure
Openalex Percentile: Top 4%
Ethics and Social Impacts of AI
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