KPMG study overstates AI adoption in businesses — thanks to AI hallucinations

A KPMG report on how Artificial Intelligence is being used in businesses around the world reportedly exaggerated adoption of the technology with bogus case studies that appear to have been based on what experts are calling "AI hallucinations".

KPMG released a report in October, titled “Redefining excellence in the age of agentic AI”. According to The Financial Times, the firm made numerous false claims about the use of AI by organisations including the Swiss bank UBS, the UK’s National Health Service and the public transit groups Swiss Federal Railways and Transport for London.

A research group named GPTZero eventually found inaccuracies in the report, terming it AI hallucinations. After the group highlighted the issue to the stakeholders, UBS said that it would ask KPMG to remove the false claims. Eventually, on Thursday, the firm, which is part of the elite "Big Four" group, pulled the report from some of its websites.

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What is concerning is the fact that the latest discovery follows a number of apparent AI hallucinations in reports by professional services firms. Last month, EY had to retract its study over fake footnotes and other errors. Interestingly, even these discrepancies are also identified by GPTZero.

What the report claimed

The KPMG report claimed that global wealth manager UBS “integrates AI agents across investment advisory, risk management and compliance monitoring”. “These agents operate within a composable platform co-developed with Microsoft, enabling personalised, efficient and compliant financial journeys," the report read.

However, a spokesperson from UBS told FT that the assertions were "factually incorrect". The study also noted that Swiss Federal Railways offers AI agents that “help users plan, book, and optimise journeys based on preferences, real-time conditions and carbon impact, turning SBB into a holistic mobility orchestrator”.

However, a spokesperson from Railway confirmed that the assertion was “not accurate”. KPMG’s study also claimed that Transport for London was using AI agents “to predict and manage congestion, personalise commuter updates and co-ordinate multimodal transport”. The spokesperson for the group called the assertion "misleading".

The discrepancies in reporting are concerning since big consultancies such as KPMG and EY are viewed as highly credible, so their reliance on false information “increases the risk of second-hand hallucinations”, Edward Tian, GPTZero chief executive, told FT. This reflects that AI hallucinations have become a growing problem across professional services.