Here’s how AI is making significant impact on financial services
By Puja Sharma
Competition for consumers and their financial data continues to intensify across incumbent banks, FinTech, big tech, and big-box retail, according to the survey by Nvidia. This is compounded by highly innovative digital experiences being deployed across industries, which continue to shift consumer expectations.
Financial services companies must enhance the level of personalization, data security, customer service, pricing, and more in the creation and delivery of financial products or expect to lose market share to those who do. Artificial intelligence, machine learning, and deep learning equip financial services companies with the ability to accelerate revenues, create operational efficiencies, and enhance customer experiences.
Since last year’s “State of AI in Financial Services” survey, AI-enabled applications have moved from the innovation lab to being the nucleus of the new AI-led financial services enterprise. AI-enabled applications are powering banks, insurers, asset managers, and fintechs to—not only deliver improved services—but outperform competitors, increase customer lifetime value, and increase market share.
AI is pervasive across financial services
Deep Learning Dominates in Capital Markets and Retail Banking, While FinTech Relies on Machine Learning Across all sectors of financial services—capital markets, investment banking, retail banking, and fintech—over 75% of companies utilize at least one of the core accelerated computing use cases of high-performance computing (HPC), machine learning, and deep learning.
Capital market firms—hedge funds, asset managers, and exchanges—that need every possible edge to improve financial returns are the most prevalent users of deep learning at 58%. In contrast, 80 percent of fintechs—which have the enterprise AI capabilities available from the cloud but may lack the scale of data needed to enable many deep learning use cases—are leveraging machine learning
Impact of AI in Financial Services
Around 91% percent of financial services companies are driving critical business outcomes with investments in AI. First and foremost, 43% of respondents stated that AI is yielding more accurate models. Along with model accuracy comes a host of other benefits
Companies are experiencing significant financial benefit from enabling AI across the enterprise. Over 30% of respondents stated that AI increases annual revenues by more than 10%, while over a quarter stated that AI is reducing annual costs by more than 10%. The data reinforces the state of play for AI in financial services today: Companies not utilizing AI are in the minority and consequently more likely to deliver inferior customer experiences and less efficient operations, leading to reduced revenues and market share.
Today’s market demands that companies deploy AI-enabled applications at scale. To build an AI-powered bank, leadership must invest in the enterprise AI infrastructure that enables data scientists, product managers and IT leaders to enact leadership’s AI strategy. Successfully deploying an AI strategy will enable these financial services firms to achieve higher revenues, lower operating costs, greater customer satisfaction, and an overall competitive edge in the industry
Key highlights
- Financial services companies are now looking at AI as a means to assess risk and create operational efficiencies in the face of macroeconomic challenges
- The number of financial services companies considering themselves ‘AI laggards’ fell significantly since last year
- Recruiting and retaining data scientists is now the biggest challenge in achieving a financial services firm’s AI goals
IBSi FinTech Journal
- Most trusted FinTech journal since 1991
- Digital monthly issue
- 60+ pages of research, analysis, interviews, opinions, and rankings
- Global coverage