The biggest barriers to AI in banking
By Dan Faggella, Founder and Chief Executive, Emerj Artificial Intelligence Research
What artificial intelligence (AI) applications and uses are delivering return on investment now for the banking industry at banks like HSBC and Lloyd’s Banking Group?
How are back-end banking processes, like lending and fraud, and front-end processes, like customer service and sales, being transformed or automated at large companies today?
Emerj asked these questions of top bankers and AI professionals in the US and Europe as part of what we believe is the largest report on the state of AI in banking ever.
We also asked: Which AI applications will define the winners and the losers in the banking industry in the next five years? Who are the leading AI vendors serving the banking industry? And what are the strengths, weaknesses and case implementations for each of these vendors?
We mapped more than 70 AI banking applications, analysed more than 45 use-cases of AI at top banks in the US and Europe – including JPMorgan Chase, Bank of America and ING – and conducted more than 30 primary research interviews with banking leaders, senior banking data scientists, and leading AI vendors in banking.
Our report, ‘AI in Banking Vendor Scorecard and Capability Map 2019’, highlights four critical findings:
1. Chatbots are overhyped: Conversational interfaces represent over 35% of banking press releases and mentions of AI, but they represent only 8% of the total funding received. Banks are incentivised to appear hip, modern, and convenient to their customers and investors – and many banks believe the hype and do their own ill-fated pilot of a chatbot.
2. Banks are focused on risk, not efficiencies: Of the total of nearly $3bn raised by AI firms, well over 50% was raised by firms operating in fraud and cybersecurity, compliance, risk management, and lending. Banks want to automate tedious and repetitive tasks, but they also want to ensure compliance with increased regulatory standards.
3. In AI adoption, culture is a bigger barrier than data: Bankers and vendors ranked “lacking a culture of innovation” as the critical barrier to AI adoption in banking. Our report covers strategies to overcome this hurdle.
4. Customer-facing applications will win the day: Five or more years into the future, customer-facing AI applications are likely to be the biggest factor in winning market share. These applications can’t be realised until banks revitalise their data infrastructure in the years ahead.Emerj is an artificial intelligence market research firm. Learn more about the full report: https://emerj.com/report/ai-in-banking-vendor-scorecard/