FIs ‘to spend $1.5 billion on AI tech in 2017’
Written by Anthony Strzalek
Financial institutions are set to spend $1.5 billion on AI technology this year according to research from consultancy firm Opimas, with that figure rising 75 per cent to $2.8 billion by 2021.
The firm also predicts that, globally, AI technologies will reduce the number of employees in the capital markets by 230,000 by the year 2025. Opimas believes the biggest effect will be had on those in the asset management industry where 90,000 staff will be replaced by machines.
However it is also predicted that around 30,000 new jobs will be created for technology and data providers who responds to the financial industry’s new requirements and demands.
The report states that “artificial intelligence is a term used very loosely in the financial industry to describe various technologies capable of addressing firms’ unsatisfactory operational efficiency and other needs. The various AI tools are, in fact, quite distinct and should be used to tackle different business issues.”
The firm lists four major areas of AI:
• Robotic Process Automation (RPA): This technology aims to replace manual handling of automated processes for repetitive and high-volume tasks.
• Machine Learning (ML): This is a process on which most AI is being built. It requires using vast amounts of data to train a system and fine tune it.
• Deep Learning (DL): This is a specific method of machine learning that has been a game changer in data-intensive, machine-learning processes.
• Cognitive Analytics (CA): This approach mimics the human brain in making deductions from vast amounts of data.
The report goes on to suggest that this increased use of AI will positively affect the larger financial institutions while making it more difficult for challengers. It states: “Since they need access to vast amounts of data to efficiently train an AI system, banks have a clear advantage over potential new entrants because they can leverage their huge internal data sets. Once financial firms revamp their business operations using AI technologies, they will raise the barriers to entry in their market so high that it will be nearly impossible for newcomers to compete.”