Banks and insurance companies plan to double down on their investment in artificial intelligence systems, despite slow uptake so far, as most see the technology as the key driver of future growth for the financial services industry.
So says a new report, "The Road Ahead: Artificial Intelligence and the Future of Financial Services", which has been conducted by The Economist Intelligence Unit (EIU) for ThoughtSpot. The study analyses the sentiments of 200 business executives and C-suite leaders at investment banks, retail banks, and insurance companies in Europe, North America, and Asia Pacific.
Respondents were clear AI will transform their business in a number of ways over the next five years, including spurring new products and services (27%), opening up new markets or industries (25%), and paving the way for innovation (25%). About one-third (29%) expect between 51% and 75% of their workloads to be supported by AI technologies by 2025.
In addition to driving future growth, AI technologies promise significant savings both today and in the future: 37% of respondents report that their organisation has reduced operational costs as a result of AI adoption and use, and another 34% predict that AI will lower their cost base in the long-term.
When it comes to other benefits of AI, one-third of respondents each reported a greater use of predictive analytics (34%), increased employee capacity to handle workload volume (33%), and enhanced customer service and satisfaction (32%).
Despite relatively slow adoption rates to date, the promise of AI holds clear, with 86% of respondents saying they plan to increase AI-related investments into the technology. However, greater AI adoption will ultimately be driven by how much financial services organisations invest into upskilling their workforce. This is required to get real value from democratising insights, the report insists.
According to the data, the industry is at a halfway point when it comes to upskilling, with 49% of respondents saying training initiatives for employees to better understand AI are currently in place. Another 42% have plans to implement such training.
ThoughtSpot chief executive Sudheesh Nair said: "We’re already seeing the massive impact AI is having on financial institutions’ businesses by reducing costs, but more importantly, driving new growth. The rapidly rising AI adoption and training rates are a clear precursor of the AI revolution that is set to unfold over the next five year.
"AI is the new growth engine, and the key to unlocking its potential requires investing in talent. Financial services companies must train and reskill employees to capitalise on the productivity and innovation gains made possible by the technology."
While the long term outlook for AI in financial services is bright, organisations do have concerns in realising those benefits. The research found two-fifths (40%) of organisations cite risk, specifically security, as the greatest area of concern, more so than cost (39%), insufficient infrastructure (29%), and poor data quality (28%).
Only half (52%) are confident about their preparedness to address AI-associated risks like security, and only 55% have developed policies, procedures and oversight processes for AI-based automation, highlighting the need to invest in solutions and policies that protect governance and security while mitigating.
The Economist Group managing director of thought leadership Dr Katya Kocourek added: "AI has the potential to truly transform the banking and insurance industries. The research shows the strides that are already underway and the path forward that will boost the industry to the next phase of AI adoption. Like any potentially transformational technology, it will not be a path without risks, but the impact on the future of banking and insurance is clear and promises to deliver a world of value."