Banks and insurance firms are planning to increase their artificial intelligence-related investment into technology by 2025, according to research from The Economist Intelligence Unit.

The report, commissioned by AI-analytics and search firm ThoughtSpot, surveyed 200 business executives and c-suite leaders at investment banks, retail banks and insurance companies in North America, Europe and Asia Pacific.

It found that while a large majority (86 per cent) of respondents had a strong degree of confidence in the benefits of AI to shape the future of financial institutions, more than half of respondents said the technology was not yet in use in the business’ processes and offerings, with just 15 per cent saying the technology is used extensively across the organisation.

However, despite relatively low levels of implementation, the research found that many institutions are beginning to invest in AI over the next five years, with 27 per cent saying it will spur new products and services, a quarter believing it will open up new markets or industries and the same amount saying it is paving the way for innovation in their industry.

Looking to the future, 29 per cent of respondents expect between 51 per cent and 75 per cent of their workloads to be supported by AI technologies in five years’ time, as processes become increasingly automated.

AI is also viewed as a key driver of efficiencies and cost savings, with 37 per cent of respondents reporting that their organisation have reduced operational costs as a result of AI adoption and use, with another 34 per cent predicting that AI will lower their cost base over the next five years.

With regards to other benefits of AI, a third of respondents each reported a greater use of predictive analytics (34 per cent), increased employee capacity to handle workload volume (33 per cent), and enhanced customer service and satisfaction (32 per cent).

However, greater AI adoption will ultimately be driven by how much financial services organisations invest into up-skilling their workforce.

According to the data, the industry is at a halfway point when it comes to up-skilling employees, with 49 per cent of respondents saying training initiatives for employees to better understand AI are currently in place, while another 42 per cent have plans to implement such training.

Investment banks are deploying a higher volume of new AI applications on average when compared to their retail bank and insurance peers, the report found. They are also the most advanced when it comes to the implementation of training programs: 54 per cent have already implemented training initiatives, compared with 46 per cent in insurance and 48 per cent in retail banks.

Additionally, investment banks are most likely to use machine learning (63 per cent) and image analysis (52 per cent), whereas retail banks are more heavily tapping predictive analytics (71 per cent) and virtual assistants (61 per cent).

While the long term outlook for AI in financial services is bright, organisations do have concerns in realising those benefits. The research found 40 per cent of organisations cite risk - specifically security - as the greatest area of concern, more so than cost (39 per cent), insufficient infrastructure (29 per cent) and poor data quality (28 per cent).

Only half (52 per cent) were confident about their preparedness to address AI-associated risks like security, and 55 per cent have developed policies, procedures and oversight processes for AI-based automation, highlighting the need to invest in solutions and policies that protect governance and security while mitigating.

Sudheesh Nair, chief executive of ThoughtSpot, said: “We’re already seeing the massive impact AI is having on financial institutions’ businesses by reducing costs, but more importantly, driving new growth.

“AI is the new growth engine, and the key to unlocking its potential requires investing in talent - financial services companies must train and reskill employees to capitalise on the productivity and innovation gains made possible by AI.”

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