Investment in AI is skyrocketed, but its real utility is still evolving, many consider it as an emerging technology.
While the financial sector has used artificial intelligence in one form or another for several years, the recent increase in activity and investment linked to AI has the focus on the scaling of these new technologies. According to the latest Infosys Bank Tech index, the world’s banks allocated 29% of their technological budgets at AI in the third quarter of 2024, against 20% in the first quarter, an overall increase in nine percentage points.
An IDC study provides that global investment on AI in systems, services and platforms to reach $ 300 billion by 2026, which leads to an annual growth rate made up of 26.5% since 2022 – With financial services which should explain an important part.
Among the engines of this push, there is undoubtedly the launch in 2022 of Chatgpt. Since then, according to Goldman Sachs, $ 45 billion in inflation-adjusted investment have been engaged in AI technology in the United States only in last year.
In this new era, İşbank is at the forefront. “As a pioneer in financial technology, our mission is to provide seamless hyper-personalized experiences thanks to the strategic integration of advanced innovations,” said Sezgin Lüle, assistant CEO based in Istanbul. “Among these, AI stands out as a cornerstone to reshape the banking sector and redefine the customer experience.”
Today, AI is at the heart of the plans of I şbank.
“By allowing a predictive analysis, hyper personalized services and increased operational efficiency,” explains Lüle, “AI is not only technological progress. It is an engine to reshape the financial ecosystem. »»
Another institution that directs the accusation is Nubank, based in São Paulo. The CTO Vitor Olivier says that predictive AI allows it to gain a lever effect and offer value in a competitive landscape.
“We estimated from the start that everything was going to concern the precise megadon on a larger scale and to provide higher confidence decisions on a larger scale and a lower cost. »»
Over the past three years, Nobank has exercised Genai tools to interact with customers and help them better understand their financial situation. The Neobank expects AI to be a growth engine for its activities and customers – and not only on its domestic market. Although the international growth of the banking sector has been largely gone through mergers and acquisitions, Nubank bets that it can develop organically beyond borders via new platforms at lower cost, which allows it to approve more customers, banish more people and offer more competitive products.
“We were born as mobile natives,” explains Olivier. “We have no branches, so all our 100 million customers are blindfolded via the application.” Although the smartphone has put a bank branch in everyone’s pocket, the AI puts a banker in everyone’s pocket, providing personalized ideas and customers who push customers so as to generate better decisions.
“I think it’s the next wave,” predicts Olivier. “It is a question of optimizing people’s lives through technology and giving them greater confidence than they make the right decisions to manage their finances.”
Hyperscality
Nubank has in place several partnerships, mainly focused on operations, productivity and infrastructure, several of them with hyperscalers: cloud service providers that provide services such as IT and storage on a D scale ‘business.
Hyperscalers have no doubt become essential to any vast AI strategy. In the United States, they spent around $ 200 billion in AI in 2024, according to Goldman Sachs, a number that he plans to increase to $ 250 billion this year. For Standard Bank Group, this is where a large part of the investment is focused.
“In the end, you go from the computation power to the calculation power of the third party hyperscaler and it is most likely that your investment will be,” says the standard banking IOC Jörg Fischer. At this stage, the company measures its main investment in time rather than money.
As technology progresses, Fischer expects it to become an integral part of daily operations. That said, it will take a while before the impact of AI can be claimed to be “deep”. In the meantime, Standard Bank focuses firmly on improving “higher level” productivity incorporating AI.
“We are really pushing AI now and we use it daily,” explains Fischer. This means working with several technology suppliers. It is also nervous with regard to customer oriented AI. Human surveillance must prevent the AI from running “totally wildly” – by taking out a range of reputation risks – errors, ethical concerns, or even responsibility, he adds.
As with previous IT innovations, the AI benefits depend on the levels of trust, which makes pre-adoption tests essential. After “initial exuberance”, explains Satish Babu, principal engineer of Standard Bank, the banks approach the practical question of the way of making AI the basis of a robust set of products that meet the true needs of customers.
“We carry out viability assessments at the start of the cycle, to see if an idea will give us a reasonable return,” he says. “There is one element of unknown until we tests, but we make quick judgments on the return on investment.
“We always consider media threshing as” the art of the possible “, then determine how it applies to our situation and if it makes sense for us. There is certainly an exuberant media threshing on what technology can provide, and I think it will be up to it at a given time. But we are quite far from it.
For certain areas of financial services, the horizon is more distant. “Although we expect AI technology to help improve yields, we do not see fully automated investment funds in the near future,” said Hidekazu Ishida, Global Financial City Tokyo Advisor (Fincity .Tokyo). “It is because good investment judgments are very subjective and unique, and the current AI technology is not approaching.”
That said, some investment managers are trying to use AI.
“Like Japanese chess players train with AI players, fund managers will increasingly use AI technology to collect and process information,” explains Ishida. “We hear that some fund managers use AI to replace the search side search. We also mean that some are trying to use non -financial data to assess the speed of management change. Quantitative tools tend to be lagging behind compared to the change in management behavior, but AI, combined with the creativity of the fund manager, will eventually help investors obtain higher yields, he adds .
Unequal progress
Attitudes with regard to the promise of AI are far from even global financial markets. Some parts of the sector remain obsessed with the use of AI for additional productivity gains or a competitive advantage, rather than focusing on its potential to disrupt and transform, observes Dennis Flynn, AI strategist and researcher Main at the Center for Sustainable Business, University College London.
“By considerably improving predictive precision,” says Flynn, “AI could restrict or even eliminate arbitration opportunities, forcing a re-evaluation of the revolving risk-reward dynamics that underpants the modern markets. Those who embrace this paradigm shift, rather than clinging to obsolete models, will emerge like the real winners. The AI should allow us to achieve more with the same resources, not just do the same with less. Abandoning familiar working means is difficult, but we are starting to see a change in the state of mind. »»
For many banks, however, AI is already at the heart of improving operational efficiency, improving decision -making and expansion of product offers, strategic partnerships helping them to evolve These advantages and to accelerate innovation.