Hani Hagras, Chief Science Officer at Temenos
Artificial Intelligence (AI) is fast becoming a game-changer for banks. The industry is coming to terms with the significant technological changes that AI brings and the opportunities it provides for growth in the global banking sector. In a recent study from Economist Impact, 75% of bankers surveyed believe that the sector will be significantly impacted by generative AI and 71% agree that unlocking value from AI will be the key differentiator between winners and losers.
As we look ahead, here are my predictions on the key trends that will shape adoption of AI in the banking sector.
Generative AI
The rise of Generative AI promises to unleash a wave of innovation, efficiency and personalisation for banks and their customers. This can revolutionise how banking operations and services are delivered, creating novel and unique services, delivering huge efficiencies for banking operations, and changing the way end users interact with banks. According to McKinsey, across the banking industry, this technology could deliver additional value of $200 billion to $340 billion annually, arising from various use cases and applications across the banking value chain from customer engagement to back-office operations.
Responsible AI
With the increased use of AI in banking and finance applications, there will be a need to have truly explainable AI models that can be easily understood, analysed and augmented by both business stakeholders and regulatory authorities. In addition, there is a need for the outputs of these models to be easily understood and analysed by the lay user. We also need to make sure that the outputs of these models are not biased (against any customer segment or demographic) and that they are fair and safe. Responsible AI is the only way to ensure its widespread deployment in banking.
Governance of AI
Most governments and regulatory authorities all over the world are working on putting tight governance and controls on AI development and deployment in the banking and financial services sector. This will enable banks and financial institutions to harness the full potential of AI whilst ensuring its use as a safe and useful technology, safeguarding against any adverse repercussions.
AI to Enable Financial Wellbeing
Explainable AI can help banks and financial institutions enable financial wellbeing and inclusion. For instance, banks can use explainable AI to forecast cashflows of individuals in financial difficulty and help support them, or to ensure that credit decisions are fair and inclusive, or to provide tailored wealth advice.
AI to Leverage Expanding Data Sources
With the rise of the Internet of Things (IoT) and social media, more data will become available about the banking industry and its end customers. AI can play an important role in extracting the full value from huge volumes of IoT data, as well as unstructured data from social media, and integrate this with transactional data on customers. This can provide banks with unique customer insights and help them launch hyper-personalised products and services which could change the face of banking in the coming years.
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- Source: https://www.finextra.com/blogposting/25571/the-five-ai-trends-shaping-banking-in-2024?utm_medium=rssfinextra&utm_source=finextrablogs
