Report highlights where banks are seeing the greatest returns
As regulators take a closer look at the risks of artificial intelligence in capital markets and financial services operations, how far into adoption of AI are Canadian banks?
With everything from the most mundane tasks to the largest investment decisions among the potential uses for the fast-growing technology, a new report from AI business solutions developer GFT Canada quizzed more than 200 IT decision makers in the banking sector to find out more about how they are using AI.
Almost every respondent (99%) said that they are focusing on customer-facing tools (68% on customer service), but this is not where they are seeing a significant return on investment (just 32% said they were). However, when it comes to internal capabilities, 68% said AI was a value driver.
Banks are spending around 35% of their IT budgets on AI (with a 20% hike expected in the next five years) and are seeing benefits in areas such as fraud detection and cyber security monitoring (45%).
For front-office operations, 76% of investment banks are using AI for customer service with 42% invested in personalized banking and marketing, but automation has provided significant ROI for only 26% of respondents while personalization has delivered for none. This is compared with the third of respondents who have implemented AI for internal operation functions, where 58% say AI is delivering the best value.
Retail banks have also prioritized customer experience (67% have invested in AI for this) but again have yet to see significant ROI with just 18% reporting measurable results. For back-office operations, almost two thirds say they have seen significant returns.
“The continuing evolution of AI technology presents a world of opportunity to banks, but in order to effectively harness that power, the institutions first need to understand where exactly in their business AI will be the most beneficial,” said Andre Gagne, CEO of GFT Canada. “What we are continuously seeing through our on the ground work with financial institutions is that in order for banks to stay competitive, operational excellence is key. While customer-facing tools are a great way to improve relationships, to truly see gains that impact the bottom line, banks should turn their focus inward to their day to day processes.”
The CFA Institute president recently shared her views on how AI is changing the financial advice industry globally.
