A new survey released by the World Economic Forum and the Cambridge Centre for Alternative Finance (CCAF) finds nearly two-thirds (64%) of financial services leaders expect to be mass adopters of AI in just two years compared to just 16% doing so today. These firms expect to use AI for purposes beyond cost reduction including revenue generation, process automation, risk management, customer service and client acquisition.
In Transforming Paradigms: Global AI in Financial Services Survey, over 150 senior financial services executives in both fintech and incumbent financial institutions responded to a range of questions on the impact AI will have on the industry, concluding that there will be a significant gap between firms that quickly implement AI and firms that lag behind.
Currently, 60% of firms invest less than 10% of their R&D resources on AI despite evidence of accelerating returns. Pay offs have shown to be especially strong between investment levels of 10% and 30% as well as investment levels of 30% and >40%.
“The comprehensive and global study confirms that AI is affecting the financial system at an accelerating pace,” says Matthew Blake, Head of Financial and Monetary Systems at the World Economic Forum. “With the rising trend of mass adoption of the technologies throughout financial services, those firms that implement AI quickly look set to sprint ahead.”
The study has also revealed executive fears surrounding AI bias and market-wide risks, with over half of executives saying they expect mass AI adoption to worsen bias and discrimination within the sector. Other market-wide risks were also identified.
The Global AI in Financial Services Survey, which was produced in collaboration with EY and Invesco, looks into many areas of AI adoption in financial services. The report’s other major findings include:
• 77% anticipate AI to have high or very high strategic importance within two years • Nearly half of all respondents see a major competitive threat in “Big Tech” firms leveraging AI capabilities to enter financial services. • Selling AI-based solutions as a service is becoming a distinct business model, currently adopted by 45% of fintechs and 21% of incumbents, which allows firms to capitalize on larger and more diverse datasets through digital platforms. • Novel insights are increasingly provided by using AI to analyse new or alternative datasets such as social media and geo-location data, with 60% of respondents making use of such data in their AI applications. • Data quality and access to data and talent are seen as major obstacles to implementing AI by more than 80% of respondents each. • Traditional financial services firms expect AI a 9% net reduction of jobs by 2030 while fintechs expect to increase their workforce by 19%. • While views of regulatory influence on AI implementation diverge, most firms feel impeded by data-sharing regulations between jurisdictions and entities as well as regulatory uncertainty and complexity.