Banks lead industries in adoption of generative AI technology

A new report reveals that the banking sector is leading the integration of generative AI technology compared to other industries.

The survey, conducted by SAS and Coleman Parkes Research, indicates that 60% of banking leaders have already incorporated generative AI (GenAI) into their daily operations, with nearly all others planning to do so within the next two years.

The report titled "Your journey to a GenAI future: A strategic path to success in banking" gathered insights from 1,600 business leaders across 20 countries, including 243 senior banking executives who are decision-makers in their organisations' GenAI strategies.

90% of the polled banking leaders expressed they have dedicated GenAI budgets for the coming year despite global trends of declining interest rates on savings accounts and loan applications.

Within the group already implementing GenAI, 43% have been experimenting with the technology at the enterprise level. Furthermore, six in ten have deployed at least one use case of GenAI, marking the highest adoption rate seen across industries.

Banks are significantly utilizing GenAI in various departments such as marketing (47%), IT (39%), sales (36%), finance (35%), and customer service (24%), surpassing cross-industry averages in these areas.

Notable improvements have been reported in employee experience and satisfaction (90%), risk management and compliance (88%), and time savings and reduced operational costs (85%). Additionally, substantial improvements are noted in customer satisfaction and retention (82%), efficiency in data processing (78%), and sales or market share from data-driven insights (76%).

Marketing is the primary area of application for GenAI, with banking marketers using the technology predominantly for customer interactions (44%) and creating written content (33%). Plans to expand its use include audience targeting (64%) and trend analysis (64%).

Data privacy and security remain significant concerns, with 74% and 71% of banking leaders expressing worry over these areas respectively. Synthetic Data has been identified as a potential solution, with 29% already using it and another 33% considering its application.

Other challenges include handling public and proprietary data sets, an obstacle cited by 54% of respondents, and moving GenAI from conceptualisation to practical application as noted by 49%.

There is also apprehension around GenAI governance and regulation. Currently, only 6% claim to have a well-established governance framework, while 58% are in development, and over a third describe theirs as "ad hoc or informal" (27%) or "non-existent" (9%).

Technological limitations and a lack of transparency and accountability are pointed out as major hurdles to setting up effective governance and monitoring frameworks, each cited by 30% of respondents, figures which are slightly higher compared to other industries.

Alex Kwiatkowski, Director of Global Financial Services at SAS, commented, "GenAI is obviously a major trend across sectors right now, but maybe most significantly in financial services. Our survey found that banks, along with insurers, are currently using GenAI at higher rates than other industries. Among the many benefits early adopters are seeing, one of the most oft-cited by banking leaders is in risk management and compliance, where nearly nine in 10 reported improvements after deploying GenAI."

He further remarked, "GenAI is changing the world of banking in ways that were previously unimaginable — and at astonishing speed. There is no shortcutting AI governance in banking or any industry. Trustworthy AI requires a foundation of human centricity, and it must embody the other core tenets of responsible innovation — inclusivity, transparency and accountability among them."

Stu Bradley, Senior Vice President of Risk, Fraud and Compliance Solutions at SAS, added, "GenAI technology is a double-edged sword for banks, as it has been weaponised by criminals to commit fraud faster than banks can adopt GenAI to protect their customers. But better anti-fraud safeguards are just one of many potential advantages awaiting firms that take the GenAI leap. In fact, leaders on the first wave of GenAI implementation are seeing early returns on their investments in many areas of the bank."