A new report by The Economist Intelligence Unit, which was sponsored by Geneva-based banking software company Temenos AG, surveyed some 305 banking executives from around the world. 77% of these bankers stated that AI will separate winning banks from losers.
The role of COVID-19 pandemic
The report also noted that the COVID-19 pandemic has put global banks under immense pressure to readjust their strategies and align with the technological requirements of the 21st-century banking industry.
“Retail, corporate and private banks were already under pressure to deploy new technologies and reshape their company cultures in order to compete with big tech firms and payment players. Now, as digital banking surges due to the coronavirus pandemic, this task is more pressing than ever,” said some part of the report.
Key findings from the report
- 66% of banking executives say new technologies will continue to drive the global banking sphere for the next five years while regulatory concerns around these technologies remain top of mind for banking executives (42%).
- 77% of bankers believe that unlocking value from AI will be the differentiator between winning and losing banks.
- 45% of respondents are focused on transforming their existing business models into digital ecosystems. Therefore, banks are expected to continue to adapt their internal structures to digital technologies in order to enhance customer experience, product offerings, and new revenue streams.
The backstory and the present concerns
Prior to the outbreak of the Coronavirus pandemic which has destabilised the global economy and raised major health and safety concerns, many banks around the world were already making major efforts towards the adoption of Artificial Intelligence in their daily operations. Bank customers were encouraged to make use of digital banking solutions in a bid to reduce traffic in banking halls.
To a large extent, this worked, although the pandemic really helped to accelerate the pace. However, the widespread adoption of Artificial Intelligence has not come without some concerns/challenges. According to the report by The Economist Intelligence Unit, data bias, “black box” risk, and lack of human oversight as some of the main concerns bothering bankers.
The report did, however, specify some regulatory guidelines on how best banks can deploy Artificial Intelligence, as you can see below:
- Ethics and fairness: banks must develop AI models that are ‘ethical by design’. AI use cases and decisions should be monitored and reviewed and data sources regularly evaluated to ensure that data remains representative.
- Explainability and traceability: steps taken to develop AI models must be documented in order to fully explain AI-based decisions to the individuals they impact.
- Data quality: bank-wide data governance standards must be established and applied to ensure data accuracy and integrity and avoid bias.
- Skills: banks must ensure the right level of AI expertise across the business in order to build and maintain AI models, as well as oversee these models.
Why it matters
Artificial Intelligence is expected to remain very relevant for banks, even after the COVID-pandemic must have finally been brought under control. Therefore, it is expedient for banks around the world to really develop their AI capacity in order to succeed both during and after the pandemic.