The World Economic Forum and the Cambridge Centre for Alternative Finance (CCAF) recently published a report targeting one specific area of innovation in financial services: artificial intelligence. The report polled 150 senior financial services executives across both fintech and traditional financial institutions.
The study found that 60% of firms invest less than 10% of their R&D resources on AI even though it is an area where returns can be quite high. It also found that 64% of financial services executives expect to become mass adopters in just two years. The report details the areas in which companies are deploying AI. Most often we think of AI as a means to reduce costs, but it also is being deployed to increase revenue. Areas of most prominence include process automation, risk management, customer service and client acquisition. Perhaps not surprisingly fintech firms are creating new products using AI in a variety of ways while traditional financial services firms are using AI to improve existing products.
Beyond the benefits of AI, the researches also delved into risks of AI, such as the perceived risks of privacy breaches, cyber-attacks, biases/discrimination, systemic risks, and concentration risk. For this reason many firms are preparing for some of these challenges utilizing risk and compliance teams in AI implementation.
Beyan Zhang Executive Director of the Cambridge Centre for Alternative Finance noted in the release:
“This empirical research underscores the growing importance of harnessing AI in financial services which gives new impetus for firms to develop a holistic and future-proof AI strategy.”