Deployment of AI Dominated by Largest Financial Organizations
The ‘AI in Banking’ Digital Banking Report surveyed banks and credit unions globally to determine the extent of development of artificial intelligence functionality in the banking industry. The findings indicate that industry-wide deployment is far behind other industries.
The door is wide open for forward-thinking financial institutions to leverage the data, insights and advanced analytical tools at their disposal to improve back-office operations and contextual personalization. That said, research indicates that most banks and credit unions – and the industry as a whole – have not kept pace with consumer expectations around digital capabilities or digital engagement compared to what other industries are providing.
Nowhere is this more evident than with the banking industry’s deployment of artificial intelligence (AI). With an origin rooted in risk and fraud detection and cost reduction, AI is increasingly important for financial services firms to be competitive. The digital consumer is being trained by firms that are becoming masters of AI (Amazon, Google, Facebook and Apple) and expect the companies they use to know them, understand them and reward them through personalized communication.
According to the Digital Banking Report, AI in Banking: New Frontiers in Customer Experience, sponsored by Deluxe and the BAI, while organizations understand the importance of artificial intelligence, few are deploying AI solutions, with many organizations not even considering artificial intelligence in the next 18 months.
According to the Digital Banking Report, only 15% of the organizations are using AI to compete with peers and identify opportunities in their data that would otherwise be missed. Another 22% are expecting to use AI functionality in the next 18 months. But, this is just the tip of the iceberg. Soon, all financial services firms will need to leverage the power of AI to deliver better experiences, lower costs, reduce risks and increase revenues.
Interestingly, a full quarter of organizations surveyed had no plans to implement any artificial intelligence solution in the next 18 months. Given that 45% of executives surveyed by Deloitte thought that AI will be mainstream in the next 2 years, many organizations may be caught off-guard from a technology perspective.
When the report evaluated the state of AI deployment by the size of organization, it is not surprising that close to half of the largest financial institutions (over $50B) have deployed at least one AI solution, with only 12% of the largest organizations not having it on their roadmap at all.
In lower asset size categories, however, the report found that the level of current and future deployment goes down significantly. “While 25% of regional organizations (assets of $10B – $50B) have an AI solution in place today, far fewer in any smaller asset category are using AI,” states the study. Not surprisingly, the percentage of organizations that do not place AI as a priority at this time increases as the size of organization decreases (with the exception of the very smallest of organizations).
When we asked financial organizations who had implemented at least one AI solution (or were planning to implement a solution) which solution(s) they have deployed or were planning to deploy, security and biometric solutions were the most likely to be in place or on the short-term horizon. The next most likely functionality to be in place or in the near-term plans were customer support (chatbot/robo-advisor) and personalization solutions. Interestingly, of all of the solutions listed, personalization had the lowest ‘no plans’ response.
In a deeper dive into AI use, just over 40% of respondents found the use of AI for fraud and risk to be extremely important with another 32% saying that AI was very important for this purpose. In fact, fraud, security and biometrics were two of the top three functionalities found to be important to organizations globally.
