One-third of banks redirecting CX budgets towards Gen AI and ML

By Gloria Methri

In the face of tighter budgets and soaring customer expectations, banks worldwide are turning to artificial intelligence (AI) to maintain their competitive edge. The latest data from Publicis Sapient’s 2024 Global Banking Benchmark Study, which surveyed over 1,000 senior banking executives worldwide, reveals a dramatic shift towards AI-powered solutions.

Almost one-third of banks’ investments in customer experience transformation are now being channelled into AI, machine learning, and generative AI. This trend underscores a broader movement towards hyper-personalised services, data-driven decision-making, and agile operations, enabling banks to innovate faster and operate more efficiently in a rapidly evolving marketplace.

Yet, this digital revolution is far from uniform. The survey highlights a stark disparity in digital maturity among banks. In this year’s survey, only 11% met the requirements to be classed as ‘transformational leaders’, down from 22% in 2022.

At the same time, the number of ‘slow starters’ grew by 9%, widening the digital performance gap. Moreover, the data shows drastic differences in how true transformation leaders use AI. Leading banks not only allocate more funds towards this technology but also adopt a more strategic approach.

For instance, 44% of these top performers focus their AI investments on internal applications, whereas only 25% of the laggards prioritise internal AI usage. This distinction illustrates how advanced banks are setting themselves apart by laying a stronger foundation for maximising the technology’s potential.

Key findings include:

• AI investment surge: Global banks are heavily investing in AI technologies, with 29% of customer experience transformation budgets allocated to machine learning, artificial intelligence, and Gen AI.
• Budget constraints: 32% of banking executives cite lack of budget as a top barrier to digital business transformation.
• Agility gaps: Only 35% of banking executives report having a fully agile operating model, a critical component for transformation success.
• Data and analytics: Leveraging data and analytics to understand and strengthen customer relationships is the top priority for digital transformation.
• Personalised customer journeys: 42% of banks are focusing on personalised customer journeys to enhance customer experiences.

Why it matters

As banks grapple with tight budgets and a challenging digital landscape, the study shows that those who strategically invest in AI and embrace agility are poised for transformative growth and enhanced efficiency. The insights in this report are essential for understanding the strategies and technologies that will define the future of banking in the GenAI era.

“AI, machine learning and Gen AI are both the focus and the fuel of banks’ digital transformation efforts. The biggest question for executives isn’t about the potential of these technologies. It’s how best to move from experimenting with use cases in pockets of the business to implementing them at scale across the enterprise. The right data is key. It’s what powers the models,” said David Murphy, Financial Services Lead, International, Publicis Sapient.