HTEC has published a report on AI adoption in the telecommunications sector, finding that only 24.8% of telecom executives believe their organisations can scale AI rapidly.

Based on a survey of 255 C-suite telecom leaders in the US, UK, Germany, Spain, Saudi Arabia and the UAE, the study identifies skills shortages, fragmented deployments and weak executive alignment as the main barriers to wider adoption.

More than half of operators surveyed, 53%, said they still rely on isolated deployments, pilots or limited use cases. By contrast, 47% said AI is fully embedded across multiple functions.

The findings suggest many operators have embraced AI in principle without building the structures needed to roll it out across networks, IT systems and commercial teams. Almost half of respondents, 47.5%, identified lack of executive alignment as the biggest obstacle to scaling AI.

Technical capability is another pressure point. Almost all respondents, 99%, reported critical skills shortages, with the most acute gaps in cybersecurity and data privacy, AI and machine learning, and data engineering.

According to the survey, those shortages are already affecting performance. Some 46% of leaders said the gaps are driving higher costs, 42% reported margin pressure and 41% said they are reducing innovation.

Timing pressure

The research also points to a narrow window for operators trying to keep pace with the market. Executives said it would take an average of 1.95 years to rebuild competitiveness if they failed to act on AI opportunities, while major AI-related initiatives were estimated to take between 1.6 and 1.8 years.

That overlap suggests little room for delay as operators work through digital transformation plans, edge strategies, workforce changes and new service models. The report argues that the time needed to recover from inaction is roughly the same as the time available to deliver core programmes.

Understanding of AI strategy remains uneven at senior level. HTEC found that 57.7% of telecom leaders fall into moderate, low or very low AI literacy categories, raising questions about whether management teams are equipped to oversee deployment at scale.

Integration is another challenge. Some 45.1% of respondents said they struggle to embed AI into legacy OSS and BSS environments and distributed infrastructure, underlining how older telecom systems continue to complicate technology change.

Edge focus

One area where operators expressed greater confidence was edge AI. The survey found that 93% of telecom leaders are familiar with the concept and 96% said they can deploy it, reflecting the sector’s experience in running distributed infrastructure.

Respondents expect edge AI to improve network reliability, strengthen data privacy and deliver commercial benefits through lower latency and lower costs. Many said they are pursuing hybrid build-and-partner approaches to bring those projects into service.

When asked where AI is most likely to produce measurable returns, executives most often pointed to 5G and 6G network optimisation and dynamic bandwidth allocation, cited by 49.4%. Connectivity and network performance at scale followed at 45.9%, while 42.4% pointed to operational cost reduction through automation.

New revenue models beyond core connectivity were selected by 42% of respondents, while 38.4% identified AI-driven customer experience personalisation as a likely source of returns.

The study forms part of a broader cross-sector research project commissioned by HTEC and conducted by Censuswide. The wider programme gathered responses from 1,529 C-suite leaders across several industries, with the telecom findings published as a sector-specific subset.

Philip Otley, Global Managing Partner, Telecommunications, HTEC, said: “Telcos are slow muscle that think in multi-year investment cycles. The GenAI ecosystem is fast muscle moving at an unprecedented pace. Right now, a race is underway between telcos reaching customers with AI services and companies like OpenAI and Anthropic capturing that same consumer attention. Telcos have the advantage of established customer relationships, trusted identity management, and the ability to deploy AI at the edge. But advantages only count if execution keeps pace. This will be the biggest change most people live through in their lives, with hundreds of trillions of dollars in value at stake. Telcos have a real chance to be part of that. The window to gain or lose plays out in the coming few years.”

Tim Sears, Chief AI Officer, HTEC, added: “The sector is strategically aligned but operationally fragmented. Leaders agree AI matters, but far fewer understand how to scale it. Our data shows the penalty for falling behind and the time needed to catch up are almost identical windows. That leaves operators with no margin for delay.”

Coinbase, Fabric Ventures, Animoca Brands and Founders Factory have completed the first cohort of their UK Web3 and AI accelerator, R[3]sidency. The programme selected eight startups from more than 800 applications.

Each project received USD $300,000 in cash, along with mentoring and workshops led by entrepreneurs and industry specialists. The cohort was also presented to more than 40 early-stage investors at a London demo day.

Launched earlier this year, R[3]sidency aims to strengthen the UK’s position in Web3 innovation. The initiative is focused on financial technology, digital assets and the use of artificial intelligence in new online services.

The eight selected companies span several areas of fintech and software. They include Auto, which is developing an AI-based wallet for on-chain execution, and Kash, a prediction market protocol designed to sit within social media feeds.

Also in the cohort are Lexifina, which focuses on workflow automation for small and medium-sized law firms, and Poll, which is building a betting layer for group chats. Robin Markets is developing banking services for prediction markets, while Rosetta is targeting exchanges, fintech groups and on-chain allocators with software for deploying capital into yield strategies.

WEB is building tools for founders and communities to create and fund projects, while Unified is developing infrastructure intended to let asset managers use crypto assets as collateral to access traditional financial markets.

The programme brings together a crypto exchange, an early-stage technology investor, a digital assets investor and a startup builder. According to the organisers, mentors included representatives from the Ethereum Foundation, Betfair, Sky Mavis and Wintermute.

Competition for places was intense, with just eight teams admitted from more than 800 applications. The selective intake suggests the backers are prioritising depth over scale at a time when investors are closely watching how AI and blockchain may intersect in financial services and software infrastructure.

Keith Grose, chief executive officer of Coinbase UK, linked the programme to the country’s broader technology and financial strengths.

“The UK has an incredible density of entrepreneurial and technical talent. With leading global universities like Cambridge and Oxford, and being home to one of the world’s leading financial centres in London, we are optimistic that UK startups will find success building the future of finance. More broadly, we believe the UK can be a true global hub for crypto innovation. Collaborating with leading firms in support of UK startups and entrepreneurs is part of how we are supporting the UK to realise this potential,” said Keith Grose, chief executive officer of Coinbase UK.

UK focus

The launch comes as the UK competes for fintech and digital asset investment with markets including the US, Singapore and parts of the European Union. London remains a major financial centre, while Britain’s startup ecosystem has produced companies in payments, digital banking and financial software.

At the same time, crypto businesses and blockchain startups face a more demanding funding environment than they did during the market’s boom years. That has pushed many founders towards narrower business models, clearer revenue plans and products that appeal to both crypto-native users and mainstream financial institutions.

The inclusion of projects in legal software, prediction markets, collateral management and treasury-style tools reflects that shift. Several of the selected startups appear to be focused on infrastructure and workflow challenges rather than consumer speculation alone.

Fabric Ventures co-founder and managing partner Richard Muirhead said the small intake was deliberate.

“R[3]sidency is small by design. Eight teams from over 800 applications, because these founders building the machine economy need deep attention in their first months. This cohort of pathologically focused builders is shipping the financial, legal and coordination rails that autonomous agents need to operate. From programmable stablecoins for AI to legal infrastructure for software that signs contracts. The UK has a once-in-a-generation chance to build these tracks for our AI future. R[3]sidency exists to find the founders already living in that future,” said Richard Muirhead, co-founder and managing partner at Fabric Ventures.

Founders Factory has built and funded more than 450 technology companies since 2015, while Animoca Brands has invested in more than 600 companies and digital assets. Coinbase, which is listed on Nasdaq, has also sought to expand its role in startup support alongside its core crypto trading and infrastructure businesses.

The accelerator’s first cohort highlights where some investors believe new UK startups may find openings: in software that connects artificial intelligence, digital assets and financial systems, and in tools built for a market moving beyond pure crypto trading.

Lumera said the Pension Schemes Act will increase the use of artificial intelligence across the UK pensions sector by adding to providers’ data and reporting demands.

According to the company, reforms affecting defined contribution and defined benefit pensions will increase both the volume and complexity of information that schemes and administrators must manage. In turn, that is likely to drive wider use of AI, unified systems and updated operational processes.

Lumera highlighted the requirement for trustees to provide guided default retirement pathways for members of trust-based defined contribution pension schemes. Trustees will need to group members into categories suited to a particular default pathway, then revise those groupings as more information becomes available.

That process is likely to rely on handling large, changing data sets. Lumera said this type of task is well suited to AI because trustees will need to make repeated decisions based on the data they hold.

The wider reforms also point to heavier operational pressure across the market. Consolidation and new standardised Value for Money assessments are expected to create fresh demands for pension providers, particularly where data sits across different systems or in inconsistent formats.

Against that backdrop, Lumera said any broader use of AI will depend on trust, governance and compliance. Providers will need operating models and technology that can demonstrate compliance with current legal requirements and any further regulatory guidance, it said.

Operational shift

The comments reflect a wider debate in financial services over how automation should be used in regulated decision-making. In pensions, the issue is especially sensitive because providers and trustees deal with retirement outcomes, member communications and long-term savings records that may span decades.

Many schemes are already working through administration backlogs, legacy technology problems and pressure to improve data quality. The Pension Schemes Act reforms add another layer by raising expectations around standardised reporting and scheme oversight.

Lumera, which supplies technology to the life and pensions market in Europe, said AI is already being used to address some of the sector’s challenges. It added that the technology should be applied alongside human expertise, not instead of it.

Maurice Titley, commercial director for data and dashboards at Lumera, set out the company’s view on the direction of travel for the sector.

“As we enter a new era for the pensions sector in the UK, AI is set to be a critical driver of transformation in how providers achieve greater efficiencies and improve the member experience,” Titley said.

His comments place efficiency and member service at the centre of the case for wider AI adoption. They also suggest suppliers expect demand for data tools and automated processes to rise as schemes adapt to the new framework.

Titley also pointed to the compliance burden created by the legislation.

“Greater automation and use of AI will play a critical role in supporting the evolving requirements and regulations contained within the Pension Schemes Act that the industry must comply with. Innovative operating models, human oversight and robust governance will be at the centre of this drive, giving trustees and providers the confidence to capitalise on AI’s full potential,” he said.

The emphasis on human oversight is significant because pension trustees remain responsible for decisions affecting member outcomes. That means any use of AI in classification, reporting or administration will need to sit within clear governance structures and auditable processes.

Industry participants are also likely to face questions about fairness and explainability where automated systems influence how members are assigned to retirement pathways or how value assessments are prepared. Those issues have become more prominent as regulators examine the use of machine-led tools in consumer finance.

Lumera said the shift could extend beyond back-office processing and contribute to a more standardised pensions infrastructure. The company linked that potential to the long-term delivery of reform across administration, data management and scheme oversight.

“It creates an opportunity to improve administration, standards and outcomes right across the pensions sector, enhancing rather than replacing the expertise that defines the industry,” Titley said.

He added: “Investment in these technologies will be critical to extracting maximum value over the long term and achieving a market that is prudent, progressive and people-centric.”