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1、 2024 Digital Banking Report.All rights reserved.PAGE 1 STATE OF AI IN BANKINGState of AI in Banking July 2024 State of AI in Banking 2024 Digital Banking Report.All rights reserved.PAGE 2 STATE OF AI IN BANKING AI is transitioning banking from a world of workfow and process,to a world of intelligen

2、ce and automation.Jim Marous Co-Publisher,The Financial Brand Host,Banking Transformed Podcast Owner,Digital Banking Report Copyright 2024:Banking Transformed White Paper(ISSN 2375-3455)is published by DBR Media LLC,5500 Hollythorn Drive Brecksville,OH 44141,USA.Phone:+1(216)218-4257 Issue 308 Publi

3、sher:Jim Marous, Creative Director:Carol Ann Ryan WARNING:Federal copyright law prohibits copying or distributing this report in part or in its entirety.(2024)2024 Digital Banking Report.All rights reserved.PAGE 3 STATE OF AI IN BANKING Letter from the Author DIGITAL BANKING REPORT Jim Marous,Owner&

4、CEO 5582 Hollythorn Drive Brecksville,OH 44141,USA(216)218-4257 Issue 308 The deployment of Artifcial Intelligence(AI)and Gen-erative AI solutions has emerged as a pivotal force for organizations engaged in digital banking transformation.As the banking industry evaluates advanced techno-logical adva

5、ncements,it is imperative for organizations to understand the potential of AI as a tool to address north star objectives.This will allow banks and credit unions to avoid misguided efforts while becoming more future-ready and resilient in a rapidly changing banking ecosystem.Understanding north star

6、objectives prior to making decisions on AI deployment serves as a guiding principle that directs all strategic initiatives,including AI adoption.It provides clarity and direction,like a GPS device in a Jim Marous car,enabling organizations to focus their efforts on areas with the greatest potential

7、for impact and the lowest potential for risk.For instance,a banks north star might be to enhance customer satisfaction,engagement and loyalty through personalized services.AI can play a crucial role in achieving this by analyzing internal and external customer data to offer tailored product recommen

8、da-tions,proactive support,and seamless omnichannel experiences.The Power of AI AIs ability to analyze vast amounts of data in real time,identify patterns,and gener-ate insights is revolutionizing banking.From advanced fraud detection and prevention to creating personalized customer experiences and

9、improving back-offce effciency,AI-driven solutions will be the foundation of most modern banking initiatives.Gener-ative AI,in particular,is turbocharging these efforts by enabling the creation of highly personalized and contextually relevant customer interactions at scale.AI can also signifcantly i

10、mprove operational effciency and cost reduction.By automating routine tasks and streamlining processes,AI can help redirect human resources to more advanced solutions while minimizing the risk of errors.For STATE OF AI IN BANKING Letter from the Author(continued)example,AI-powered robotic process au

11、tomation(RPA)can handle data entry,document verifcation,and transaction processing,freeing up employees to focus on higher-value tasks.Finally,AI can offer valuable tools for fraud identifcation and risk management.By monitoring transactions in real time,organizations can detect transaction anoma-li

12、es,fagging potential fraud and risk.AI can also assist in automating compliance processes,reducing administrative burden and ensuring that banks adhere to ever changing regulations.The Need to Catch Up and Move Forward Our research shows that many fnancial institutions are still in the early stages

13、of AI adoption.But,the pace of technological change and the increasing complexity of customer expectations requires banks and credit unions catch up while also moving forward.To remain competitive and resilient in the face of external market conditions,it will most likely be necessary for fnancial i

14、nstitutions to collaborate with third-party solution providers who have solutions that can be brought to market seamlessly.This report,sponsored by OpenText,provides a comprehensive overview of the cur-rent state of AI in banking,offering insights into best practices,challenges,and op-portunities.Th

15、e report includes global independent research conducted to determine the AI maturity of the industry and the solutions currently being deployed.This will allow organizations of all sizes to benchmark their efforts with others in the industry.We hope the report serves as a valuable resource for banki

16、ng professionals seeking to navigate the complexities of AI adoption and drive meaningful business outcomes.Sincerely,Jim Marous Co-Publisher,The Financial Brand Host,Banking Transformed Podcast Owner,Digital Banking Report PAGE 4 2024 Digital Banking Report.All rights reserved.PAGE 5 STATE OF AI IN

17、 BANKING u Timely Insights u Exceptional Value u Digital Access u Over 300 Reports u Over 6,000 Charts u Published by Jim Marous FREE Downloads!Currently,all 300+reports from the Digital Banking Report library are available for free download by completing registration.Visit our website today!The ban

18、king industrys leading source for research with actionable insights.2024 Digital Banking Report.All rights reserved.PAGE 6 STATE OF AI IN BANKINGContents Letter from the Author|3|The Rise of AI in Retail Banking|7|High AI Expectations Meet Implementation Realities|18|Gen AI:The Bridge to Engagement

19、and Loyalty|29|About Jim Marous|36|About OpenText|36|2024 Digital Banking Report.All rights reserved.PAGE 7 STATE OF AI IN BANKING The Rise of AI in Retail Banking 2024 Digital Banking Report.All rights reserved.PAGE 8 STATE OF AI IN BANKING The Rise of AI in Retail Banking Artifcial Intelligence(AI

20、)is rapidly transforming the landscape of retail banking,offering unprecedented opportunities for innova-tion,effciency,and customer engagement.Banks,credit unions and fntech providers must understand the current applications and future potential of AI to stay competitive in an increasingly demandin

21、g and fractured fnancial ecosystem.From enhancing customer experiences through personalized services and en-gagement to streamlining and automating back-offce operations,AI is proving to be a game-changer as fnancial institutions seek to become future-ready and resilient.Artifcial intelligence is no

22、t new to the development,risk management,customer banking industry.For more than a experiences,internal effciencies and decade,banks have been leveraging AI strategic decision-making processes.in areas such as fraud detection,credit scoring,and more recently,in the realm of customer service through

23、chatbots and virtual assistants.These applications are not only improving operational effciency but also enhancing the overall banking experience for customers and members.Yet,with the introduction of Generative AI and the accelerated pace of use case development,fnancial services executives are loo

24、king to further revolutionize product 2024 Digital Banking Report.All rights reserved.PAGE 9 STATE OF AI IN BANKING CHART 1:CHART 1:USE OF GENERATIVE AI WITHIN BANKING%of respondents Generating content related to employee productivity,such as responses in email,documents,and presentations 57%Assisti

25、ng in creating new marketing content or campaigns like advertisements,offers,social posts,etc.55%Assisting in code creation for applications/software 50%Summarizing capital market research for client briefngs and faster investment decision-making 49%Summarizing complex fnancial information,such as f

26、nancial reports or prospectuses 49%Enhancing chatbots and virtual assistants for customer interactions 48%Predictive modeling of risk scenarios 40%Source:Google Cloud survey conducted by The Harris Poll August 2024 Digital Banking Report As we review AI in retail banking,its important to consider bo

27、th the opportunities and challenges of these technologies.While AI offers the promise of increased productivity,customer experiences and cost savings,it also raises questions around data use and privacy,ethics,and the balance of humans and digital in the delivery of banking services.Balancing the op

28、portunities and challenges will be key as banks navigate the AI revolution and seek to leverage its full potential to drive and maintain a competitive edge in the evolving fnancial services ecosystem.AI Impact in Retail Banking The fnancial services industry is at an infection point with AI.A study

29、by Citibank found that 93%of fnancial institutions expect AI to improve profts over the next fve years.Applying these survey results to forecasts,Citi estimates that AI could boost banking industry profts by 9%,or$170 billion,by 2028.2024 Digital Banking Report.All rights reserved.PAGE 10 STATE OF A

30、I IN BANKING CHART 2:CHART 2:IMPACT OF ADOPTING AI ON BANKS PROFITABILITY In 5 years time,will AI increase or decrease profts?Improve profts 93%Reduce profts 7%Range of Proft Impact 0 to 10%10 to 20%20%Source:City GPS Study August 2024 Digital Banking Report It is expected that the proft boost will

31、come primarily from productivity gains,as AI helps to automate routine tasks and augment human capabilities.The study notes that“nearly two-thirds of all work done in banking and insurance has high potential for AI-driven automation or augmentation.”This is higher than what has been projected for th

32、e majority of other industries.”“Generative AI has the potential to change the world in ways that we cant even imagine.It has the power to create new ideas,products,and services that will make our lives easier,more productive,and more creative.”Bill Gates,Co-Founder of Microsoft AI-Powered Interacti

33、ons One of the most talked about applications of AI in retail banking is in the area of improving customer experiences.AI-powered chatbots and virtual assistants are already becoming increasingly sophisticated,capable of handling complex queries and providing personalized fnancial advice proactively

34、 using the communication channel of choice.AI-powered assistants can provide 24/7 availability,instant responses,and personalized service at speed and scale.According to OpenText,AI powered chatbots can handle up to 80%of routine customer service questions,freeing up human agents to focus on more co

35、mplex issues.This not only improves effciency but also enhances customer satisfaction by providing quick and accurate responses to inquiries.CHART 3:STATE OF AI IN BANKING CHART 3:INTEREST IN GEN AI CAPABILITIES BY BANKING AND CONSUMERS Over a 3-year horizon High Fraud Support Personalized Offers Co

36、nsumer Interest Low Low MediumVoice Assistants Virtual Assistants Wealth Management Voice Assistants Credit Risk Assessment Medium Provider Interest High Source:Insider Intelligence August 2024 Digital Banking Report PAGE 11 2024 Digital Banking Report.All rights reserved.PAGE 12 STATE OF AI IN BANK

37、ING CHART 4:CHART 4:UNDERSTANDING DEFINITIONS AROUND ARTIFICIAL INTELLIGENCE AND GEN AI Artifcial Intelligence Machine learning Deep learning Generative AI For instance,using a model such as GPT 4 to provide human-like answers to text prompts,create images on the fy,or summarize large texts.Predicti

38、ve AI For instance,using machine learning techniques to predict a customers credit risk or purchasing propensity.Source:BCG Analysis August 2024 Digital Banking Report Artifcial intelligence-A broad term for nonhuman“intelligence”or problem-solving ability embedded in machines or software.Machine le

39、arning-A subset of artifcial intelligence algorithms in which computers fgure out how to tackle problems and discover solutions independently,often by using artifcial neural networks.Deep learning-A subset of machine learning algorithms in which computers leverage multilayer(“deep”)artifcial neural

40、networks to perform complex learning tasks that in many cases involve large amounts of text or images.Generative AI(Gen AI)-A subset of deep learning algorithms in which computers focus on generating apparently new,realistic content from unstructured inputs such as text,images,or audio.Widely known

41、examples include ChatGPT(for text)and DALL-E(for images).Predictive AI-Predictive modeling techniques that are widespread in industries such as banking and that can leverage a variety of AI techniques,sometimes including machine learning or deep learning.2024 Digital Banking Report.All rights reserv

42、ed.PAGE 13 STATE OF AI IN BANKING“AI can now analyze vast amounts of customer data and market conditions to create hyper-personalized services at scale as well as highly targeted marketing strategies to promote these services.”Personalization at Scale AI is enabling retail banks and credit unions to

43、 offer hyper-personalized services and predictive product recommendations based on the analysis of internal and external customer data,behavior patterns,and fnancial need assessment.This level of personalization was previously impossible at scale but is now becoming a reality thanks to AI and machin

44、e learning algorithms.Creating personalized customer experiences is more important than ever as offerings from non-traditional fnancial services organizations include more specialized services based on preferences,fnancial goals and even risk profles.Beyond causing silent attrition from legacy banki

45、ng organizations,these non-traditional players are realizing higher cross-sell rates and are creating loyalty through higher levels of engagement.The good news is that legacy fnancial institutions also have these AI tools(and deeper understanding of existing customers)at their disposal.The Citi GPS

46、report suggests that AI-enabled personalization could also help traditional banks provide more tailored offerings and improved customer engagement.AI-Powered Financial Advice As AI becomes more sophisticated,there will likely be a rise in AI-powered fnancial advisors and potentially even the use of

47、digital twins that can bridge the gap of providing personalized fnancial guidance to retail banking customers.AI-powered advisors could analyze a customers fnancial situation,goals,and risk tolerance to provide tailored advice on savings,investments,and fnancial planning in a more unbiased and immed

48、iate manner than is deployed currently.The Citi GPS report hints at this future,suggesting that“by 2030 or earlier,AI agents could be making fnancial decisions and interacting with banks on behalf of consumers.”While this level of AI autonomy may still be some years away and may be met with some lev

49、el of skepticism by consumers,were likely to see increasing integration of AI into fnancial advisory services in the near term.Advanced Product Development and Marketing As referenced,AI-powered predictive analytics can enable retail banks to anticipate customer needs.This same insight can help fnan

50、cial institutions develop products that better meet those needs.Unlike the past,where every fnancial institution had the same menu of deposit,loan and payment products,AI can now analyze vast amounts of customer data and market conditions to create hyper-personalized services at scale as well as hig

51、hly targeted marketing strategies to promote these services.More importantly,AI can also help banks forecast customer behavior,identify potential churn risks,and suggest product offerings that could reverse damaging attrition.The Citi report suggests that AI could drive“productivity gains for banks

52、by automating routine tasks,streamlining operations,and freeing up employees to focus on higher value activities.”This includes activities like product development and targeted marketing,which can directly impact a banks bottom line.2024 Digital Banking Report.All rights reserved.PAGE 14 STATE OF AI

53、 IN BANKING“As adverse forces continually fnd new ways to negatively impact security provisions,AI is improving fraud detection and prevention in retail banking.Advanced fraud detection systems analyze vast amounts of data in real time,identifying suspicious patterns and anomalies that might indicat

54、e fraudulent activity.”Expanded Financial Inclusion While not covered as extensively,AI has the potential to expand access to fnancial services for underserved populations by including alternative data sources and advanced risk assessment models.By including the universe of consumers and businesses

55、that currently have thin fles,banks could potentially extend credit and other fnancial services to those previously excluded by traditional banking models.This is already being achieved by many fntech and big tech frms.The Citi GPS report states that AI-powered credit risk assessment models can be c

56、ustomized to specifc customer segments,potentially opening up new markets for retail banks.This could be particularly impactful for people who rent,have service jobs,receive cash payments for work,etc.Dynamic Credit Risk Assessment While the origin of AI in banking was in the risk and fraud monitori

57、ng functions,advanced algorithms are now analyzing vast datasets to evaluate creditworthiness with greater speed and accuracy than ever before.The Citi GPS report notes that“AI-powered credit risk assessment models can now be customized to specifc industries,customer segments or regions,capturing th

58、e needs/behaviors of different groups.”This level of customization allows for more nuanced and accurate risk assessments.In addition,AI can now help banks continuously monitor borrower behavior against macroeconomic conditions,enabling real-time adjustments to risk profles and loan-loss provisioning

59、.This approach to risk management could signifcantly reduce defaults and improve the overall health of loan portfolios.Enhanced Fraud Cybersecurity Capabilities The need for robust fraud and cybersecurity capabilities has never been more critical.As adverse forces continually fnd new ways to negativ

60、ely impact security provisions,AI is improving fraud detection and prevention in retail banking.Advanced fraud detection systems analyze vast amounts of data in real time,identifying suspicious patterns and anomalies that might indicate fraudulent activity.These systems learn from new fraud patterns

61、 and adapt detection algorithms accordingly,with the intention to keep one step ahead of cyber criminals.The Citi GPS report highlights how AI systems are dramatically improving the effciency and effectiveness of transaction monitoring for fraud and money laundering.One area of improvement is in red

62、ucing false positives with AI,allowing human analysts to focus on more complex cases that require deeper investigation.Streamlined Back-Ofce Operations Despite the power of using AI to drive better customer experiences,develop new products,increase engagement and expand the reach of banking,much of

63、the current AI initiatives are focused on revolutionizing back-offce operations.In other words,cost savings.Robotic Process Automation(RPA)combined with AI can automate routine tasks,reduce errors,and free up human capital to focus on higher-value activities.It is believed that AI can automate up to

64、 80%of routine work in banking,including data 2024 Digital Banking Report.All rights reserved.PAGE 15 STATE OF AI IN BANKING “AI can help banks automate compliance processes,reducing the risk of human error and ensuring consistent application of regulatory requirements.AI also is nimble,with the abi

65、lity to quickly adapt to new regulatory changes.”entry,report generation,and compliance checks.This automation will also lead to signifcant cost savings and improved operational effciency.The Citi GPS report notes that“Gen AI will likely have a big impact on internal facing tasks such as content and

66、 information management,coding,and software.”This suggests that AI could transform everything from document processing to software development within banks.Simplifed Regulatory Compliance The regulatory landscape for banks often seems to be playing catch-up with regard to artifcial intelligence.That

67、 said,AI is proving to be a valuable tool in helping banks navigate the complexity of regulatory demands,ensuring compliance across diverse regulations.As with many other back-offce functions,AI can help banks automate compliance processes,reducing the risk of human error and ensuring consistent app

68、lication of regulatory requirements.AI also is nimble,with the ability to quickly adapt to new regulatory changes.According to the Citi GPS report,“Compliance roles have tripled in the US from 2000 to 2023.”Challenges with AI Implementations While the potential benefts of AI in retail banking are si

69、gnifcant,there are also challenges that banks must address:1.Data Privacy and Security:Since AI systems require access to vast amounts of customer data,privacy and security becomes critical.Banks must implement robust safeguards and comply with evolving data protection regulations.2.Ethical Concerns

70、 and Bias:Banks need to ensure their AI systems are designed and trained to be fair and unbiased,avoiding unfair or discriminatory outcomes,particularly in areas like credit decisioning.3.Regulatory Compliance:Banks need to ensure their AI systems comply with existing regulations and be prepared to

71、adapt to new rules as they emerge.4.Lack of Transparency:Banks must avoid advanced machine learning models that act like“black boxes”(where its diffcult to understand how they arrive at decisions).Lack of transparency poses challenges for regulatory compliance and damages trust with customers.5.Skil

72、ls Gap:Implementing and managing AI systems requires specialized skills that are in high demand.Banks need to invest heavily in training and recruitment to build the necessary AI capabilities.6.Fear of the Unknown:Many employees and customers are fearful of the unknown associated with AI.This includ

73、es all of the above challenges as well as the fear of job displacement and/or the lack of human engagement.Ongoing communication with employees and customers regarding how AI will be used(and the impact of AI)is essential.2024 Digital Banking Report.All rights reserved.PAGE 16 STATE OF AI IN BANKING

74、 Recommendations for Retail Banks Based industry research and research by the Digital Banking Report,here are key recommendations for retail banking organizations:1.Develop a Comprehensive AI Strategy:Rather than implementing AI in silos,banks must develop a clear and comprehensive strategy for inte

75、grating Generative AI into the companys operations,including implementation,governance,and risk management plans.2.Prioritize AI Investment:Invest in testing and evaluating different use cases for Generative AI such as fraud detection,virtual assistants,personalized offers,etc.3.Modernize Core Syste

76、ms:Address legacy technology issues to create a fexible,AI-ready infrastructure.4.Focus on Customer-Centric AI Applications:AI use cases that directly enhance customer experience,customer engagement and customer value,such as personalization,improved customer service,and streamlined processes should

77、 be evaluated with potential ROI attached.5.Invest in AI Talent and Training:Build internal AI capabilities through hiring and upskilling programs.Also,familiarize stakeholders with Generative AI and its effects on banking.6.Build Trust Through Transparency:Be open with customers about how AI is bei

78、ng used in banking services.Provide clear explanations and options for human interaction where needed.7.Prepare for AI-Powered Customers:Start considering how banking models might need to evolve in a world where AI agents act on behalf of customers.8.Collaborate and Partner:Consider partnerships wit

79、h fntech companies,third-party technology providers,and even other banks to accelerate AI adoption and innovation.9.Monitor and Adapt:Continuously monitor technological developments,competitive moves,and regulatory changes being prepared to adapt strategies quickly.Catching Up and Moving Forward As

80、the fnancial services industry continues to evolve,retail banks must prioritize catching up with the rapid advancements in AI technology.The potential benefts of AI are too signifcant to ignore,and banks that fail to adapt risk will fall behind their more innovative competitors.That said,any commitm

81、ent to investment in AI must take into account other technology priorities that are relatively speaking low hanging fruit.To move forward,retail banks must build a strong foundation for AI adoption.This includes investing in the necessary technology infrastructure,developing a comprehensive AI strat

82、egy,and preparing employees and customers for AI implementation.By doing so,banks can position themselves to take full advantage of the opportunities that AI presents.2024 Digital Banking Report.All rights reserved.PAGE 17 STATE OF AI IN BANKING CHART 5:Unfortunately,there is still slow adoption of

83、AI by many banks.Nearly a quarter of banks have not started on AI adoption yet.In contrast,this number stands signifcantly lower for fntech frms and insurance companies at just about 5%.Furthermore,68%of respondent banks are still only in the beginning stages of their AI journey compared to more tha

84、n 80%for other fnancial sectors.CHART 5:BANKING LAGS IN AI MATURITY COMPARED TO OTHER FINANCIAL INTERMEDIARIES Banks FinTechs Insurance Not started 21%Not started 4%Not started 6%Beginning 68%Beginning 83%Beginning 88%Maturing 11%Maturing 13%Maturing 6%Advanced/End State 0 Advanced/End State 0 Advan

85、ced/End State 0 n=73 n=23 n=16 Source:Citi GPS Study August 2024 Digital Banking Report In conclusion,AI represents a transformative opportunity for retail banking,with the potential to signifcantly enhance customer experiences,improve operational effciency,and drive proftability.The time to act is

86、now,because catching up gets more diffcult(and costly)every day.2024 Digital Banking Report.All rights reserved.PAGE 18 STATE OF AI IN BANKING High AI Expectations Meet Implementation Realities 2024 Digital Banking Report.All rights reserved.PAGE 19 STATE OF AI IN BANKING High AI Expectations Meet I

87、mplementation Realities Banking leaders globally believe AI and Gen AI present a signifcant business opportunity,according to research from the Digital Banking Report.Despite understanding these possibilities,few organizations have made signifcant progress in deploying solutions beyond fraud and ris

88、k management and some limited back-offce automation creating a readiness gap.The potential of AI and Gen AI in banking cant be overstated.According to a recent study from BCG,“Gen AI benefts include a 10-fold reduction in customer inquiry costs,a 25%decline in time spent creating marketing content,a

89、nd a 30%jump in content creation productivity all while improving customer satisfaction and accelerating issue resolution.”Citi estimates that AI could boost banking industry profts by 9%,or$170 billion,by 2028.Some of the readiness gap is related to not fully understanding the technologys potential

90、 or how to integrate it with existing technologies.Other challenges are more structural,such as having the quality and quantity of data or having the time,money,and team resources.2024 Digital Banking Report.All rights reserved.PAGE 20 STATE OF AI IN BANKING CHART 6:Source:Digital Banking Report Res

91、earch August 2024 Digital Banking Report The State of AI in Retail Banking study,sponsored by OpenText,gathered insights from over 200 fnancial institutions globally.The research provides insights into the progress of fnancial sector AI and Gen AI adoption,while also providing FIs self-assessment of

92、 AI maturity,including existing challenges and future strategies.Our research found that 84%of fnancial institutions agreed that AI and Gen AI provide signifcant benefts to the banking industry.Counter to this perspective,only 12%had a well-defned roadmap for deployment with only 8%having internal t

93、eams working on Gen AI solutions.On a positive note,57%of organizations were in the process of deploying AI and Gen AI solutions within specifc areas of their organization.CHART 6:BANKING FACES SIGNIFICANT AI READINESS GAP AI and Gen AI will provide signifcant benefts to the bank-ing industry.84%In

94、the process of deploying AI and Gen AI within certain areas of our organization.57%Have a well defned roadmap Have internalfor how to teamsembrace AI and working on GenGen AI in the AI solutions withfuture.goals and KPIs.12%8%Despite the gap between potential and reality,the largest banks in our stu

95、dy are ahead of most of their smaller peers in developing AI and Gen AI strategies.With more assets and a larger pool of budget allocated,more than 40%of regional and global banks say they have a well-defned AI and Gen AI strategy in place,with many of these frms investing a“signifcant proportion”of

96、 their technology and innovation budgets to AI and Gen AI.The readiness gap suggests that many banks and credit unions may struggle to fully capitalize on AIs benefts in the foreseeable future,with many organizations being challenged to assess the potential of individual use cases.This could result

97、in these frms falling further behind more AI-ready competitors.That said,the gap also indicates a signifcant opportunity for banks to improve their AI readiness through better strategic planning,resource deployment,and the creation of collaborative relationships with third-party solution providers.A

98、s the following chart shows,the commitment to catch up and move forward remains strong across the industry.Interestingly,despite resource constraints,there was almost no variance in the responses based on asset size of the responding organization.2024 Digital Banking Report.All rights reserved.PAGE

99、21 STATE OF AI IN BANKING CHART 7:“The ability to analyze large datasets in real time will continue to be incrementally enhanced as cybersecurity remains in the spotlight.”CHART 7:COMMITMENT TO AI INTEGRATION IS STRONGER THAN DEPLOYMENT How would you rate your FSIs commitment to integrating AI into

100、its services?Score from 1(lowest)to 5(highest).One Two Three Four Five 8%12%34%26%20%Source:Digital Banking Report Research August 2024 Digital Banking Report Where is the Value of AI the Greatest?The research conducted on behalf of OpenText found interesting trends related to the value of AI and Ge

101、n AI over time.Not only is there an overarching belief that there is signifcant value in these new technologies,but that the value tends to be centered within very specifc areas of retail banking.When we asked banking executives to share where the greatest additional value of AI and Gen AI will be i

102、n the next 3-5 years,there was a strong consensus that areas of customer service and communication will beneft the most.Customer-centric use cases such as chatbots and virtual assistants(87%)and personalized marketing and product recommendations(83%)were the top use cases mentioned,with customer ret

103、ention and churn prevention ranking lower(52%).The focus on customer-centric uses highlights the industrys focus on AIs ability to provide personalized service,anticipate needs,create new solutions and offer seamless interactions all of which are crucial for retaining customers in a competitive mark

104、et.There is also a recognition that AI can replace and enhance current human-centric tasks.The lower value of using AI to assist with onboarding and error remediation most likely is a refection on these being more complex processes than messaging and targeting.Improving back-offce productivity(74%)a

105、nd document processing improvement(48%)underscores AIs role in automating repetitive tasks,thereby increasing effciency and reducing operational costs.Finally,the emphasis on fraud detection(65%),credit scoring(62%),and compliance(58%)refects the critical role that AI continues to play in avoiding l

106、osses.These capabilities are some of the frst uses of AI in banking,which may explain the relative lower value placed on these benefts vs.those related to customer experience.The ability to analyze large datasets in real time will continue to be incrementally enhanced as cybersecurity remains in the

107、 spotlight.2024 Digital Banking Report.All rights reserved.PAGE 22 STATE OF AI IN BANKING CHART 8:CHART 9:ual g&e ion g&y ion&g orsinOffcsionsy ion g g ion sis itantinintttiningulaecs&VirvsyitttentitCredit Scorente&Analeporedict-etrtsistProduckocawekg Bacecommendevaud Ded Marndertocument Pree&Resn P

108、rRand Prtomer RAtboUinChurrChapliancFvzoersonaliprCustt RImDomProducC PCHART 8:VALUE OF AI EXPECTED TO INCREASE ACROSS MANY DISCIPLINES IN BANKING Considering AI use cases,which do you believe will add signifcant value to your business in the next 3-5 years?(Note all that apply.)87%83%Source:Digital

109、 Banking Report Research August 2024 Digital Banking Report 74%48%65%52%58%62%CHART 9:BANKS BELIEVE AI WILL IMPACT CUSTOMER COMMUNICATIONS AND SERVICE Which of the following customer experience processes do you think would beneft the most from being Gen AI enabled at your organization?(Select one.)6

110、2%26%12%Cust omer Communications and Service Cust omer Onboarding Error Remediation Source:Digital Banking Report Research August 2024 Digital Banking Report 2024 Digital Banking Report.All rights reserved.PAGE 23 STATE OF AI IN BANKING CHART 10:Source:Digital Banking Report Research August 2024 Dig

111、ital Banking Report CHART 10:PRIMARY IMPACT OF AI IS EXPECTED TO BE OUTWARD FACING EXPERIENCE/ENGAGEMENT What is the primary beneft that you would like to get from AI enabled solutions?(Select one.)40%Incr eased operational effciency/cost reduction 31%23%6%Enhanc e customer experience and engagement

112、 Enhance fraud detection and cybersecurity Improved decision making Bridging the Readiness Gap As referenced,most fnancial institutions have begun to prepare for the analysis and deployment of AI and Gen AI solutions.Unfortunately,many of these efforts lack the top-down endorsement of leadership tea

113、ms who may feel threatened by aspects surrounding a full commitment to digital transformation.The fear of job displacement,change in legacy processes,and a lack of desire to learn new technologies can create greater operational ineffciencies than existing processes.To resolve this challenge,there ne

114、eds to be a clear strategy and consistent communication throughout the organization around the value proposition related to the deployment of AI and Gen AI across key value chains.Without a clear strategy for moving forward,fnancial institutions will not be adequately equipped to make the necessary

115、changes to their tech stacks and data architecture,to address talent gaps and required upskilling,and to ensure they have AI policy frameworks in place.In the meantime(and to avoid falling further behind in becoming future-ready),institutions should continue(or begin)experimenting with use cases foc

116、used on everyday tasks,as opposed to transforming larger critical functions.Our viewing of the marketplace has seen the most use cases in the areas of productivity improvement,basic customer communication(chatbots and targeting),and enhanced security.“Establishing a proof of concept is relatively ea

117、sy,but implementing at scale is proving more challenging for most institutions,”notes Stiene Riemer,Managing Director&Partner at BCG and Global Lead for AI&Gen AI developments in Financial Institutions.“To unlock more value,business leaders should consider a structured approach to scaling,based on a

118、 three-stage framework:deploy Gen AI in everyday tasks,reshape critical functions,and invent new business models.”2024 Digital Banking Report.All rights reserved.PAGE 24 STATE OF AI IN BANKING CHART 11:It should be noted that while there is a lot of buzz and enthusiasm around the ability to enhance

119、personalization with AI and Gen AI,most of these efforts are very rudimentary at this time.The Power of Collaborating for AI Deployment To improve both speed and scale of Gen AI deployment,most fnancial institutions(69%)are collaborating with third-party solution providers as opposed to building wit

120、hin(16%)or partnering with tech providers.This bias toward using third-party solution providers refects the beneft of leveraging established partners who are investing heavily in AI and Gen AI solutions specifcally for fnancial institutions.Collaborating with organizations that not only are building

121、 AI solutions for banks and credit unions but also understand the ways to integrate with the dozens of other third party solutions in the marketplace usually allows for a faster time-to-market and lower initial costs.The organizations selecting to build AI solutions internally or partner with tech p

122、roviders tended to be the frms in the largest asset sized categories.CHART 11:MOST BANKING ORGANIZATIONS PREFER TO BUY THIRD-PARTY AI SOLUTIONS When developing AI capabilities,does your organization prefer to build these solutions in-house,buy them from an external vendor,or establish partnerships w

123、ith technology providers?69%16%15%Bu y and deploy third-party solution Build internally Partner with tech provider Source:Digital Banking Report Research August 2024 Digital Banking Report The most mentioned reasons why banks and credit unions outsource AI implementation include limited internal res

124、ources and existing expertise(32%),cost considerations and/or budget constraints(24%),and the time-to-market advantages of outsourced solutions(21%)2024 Digital Banking Report.All rights reserved.PAGE 25 STATE OF AI IN BANKING CHART 12:Source:Digital Banking Report Research August 2024 Digital Banki

125、ng Report CHART 12:WHY BANKING FIRMS OUTSOURCE AI IMPLEMENTATION What factors infuence your decision to outsource or take a collaborative approach to Generative AI implementation?Limited internal resources and existing expertise 32%Cost considerations and/or budget constraints 24%Time-to-market adva

126、ntages of outsourced solution 21%External expertise and best practice case studies 16%Scalability of external partner 7%When we asked fnancial services executives globally about the criteria for selecting third-party solution providers,the reasons mentioned included technical expertise and experienc

127、e(62%),compliance,security and privacy(56%),reputation,references and industry rankings(42%).Also of importance was the ability to customize and integrate the solutions(41%).Interesting,cost(24%)was a much lower criteria for selecting partners for AI and Gen AI deployment as was having an innovation

128、 mindset or providing support and training.2024 Digital Banking Report.All rights reserved.PAGE 26 STATE OF AI IN BANKING CHART 13:Technical Expertise and Experience Compliance,Security and Privacy Reputation,References and Industry Rankings Customization and Integration Capabilities Scalability and

129、 Flexibility Cost Innovation Mindset Support and Training CHART 13:KEY CRITERIA FOR SELECTING THIRD-PARTY AI SOLUTION PROVIDER What criteria and considerations are taken into account when determining whether to work with a third-party solution provider for specifc AI initiatives?(Provide top 3.)62%5

130、6%42%41%31%24%23%21%Source:Digital Banking Report Research August 2024 Digital Banking Report Challenges and Opportunities Defne AI Path to Success Despite all of the talk about AI in fnancial services,banks and credit unions struggle to know where to start and where best to deploy resources at a ti

131、me of continued economic uncertainty.Few would argue against the premise that adopting new AI technologies is essential for fnancial institutions to keep pace with changing customer expectations,to defend business against fntech,big bank and non-fnancial challengers,and to operate more effciently.Th

132、e underlying challenge is that overall digital banking maturity still lags behind the majority of other industries that consumers engages with.Failing to innovate with AI is increasingly putting banks and credit unions at the existential risk of falling behind the competition.The AI Innovation Repor

133、t from Evident Insights found that focusing on AI innovation enables the complete transformation of banks into data-centric organizations.AI innovation also enables leading banks and credit unions to envision the future of fnancial services and take the necessary steps to remain dominant players goi

134、ng forward.The report maintains that organizations that fail to make AI innovation core to their strategy risk being left behind in what is increasingly,at least among the largest players,becoming an AI-frst industry.Our research found that only 13%of banking organizations rate their AI maturity as

135、highly mature,17%as moderately mature,41%as somewhat mature,24%as 2024 Digital Banking Report.All rights reserved.PAGE 27 STATE OF AI IN BANKINGCHART 14:somewhat lacking digital banking maturity,and 5%as low maturity.Since AI maturity has been a moving target over the past several years(higher aspir

136、ations),this distribution has not changed much since the beginning of Covid.CHART 14:AI MATURITY REMAINS LOW WITHIN THE BANKING INDUSTRY What level of digital banking maturity exists across your organization?41%24%17%13%5%Highly mature Moderately Somewhat Somewhat lacking Low maturity mature mature

137、digital banking maturity Source:Digital Banking Report Research August 2024 Digital Banking Report As could be expected,a handful of banks globally have sprinted ahead in the race for AI maturity,staking out early leadership positions that will be extremely diffcult for lagging competitors to overco

138、me.These are almost entirely very large asset organizations as well as digital-only neobanks.To advance AI maturity,banks must align their AI initiatives with their strategic goals.This involves clear road maps,dedicated AI teams,and consistent investment in technology and talent.It also often invol

139、ves collaboration with a third-party solution provider that can deliver mature digital banking solutions.Tapping into shared innovation through diverse collaborations is essential.Savvy banks are building web-like networks spanning open-source communities,universities,accelerators,and third-party so

140、lution providers.This cooperation with outside expertise gives access to greater fows of ideas,technologies and partnerships.The signifcant portion of respondent banks with low AI skill levels reveals a critical barrier to AI adoption even if an organization decides to collaborate with third-party s

141、olution providers.This gap can impede the effective implementation and utilization of AI technologies,slowing down innovation and competitive advantage.We found that 55%of banking organizations report either a relatively low level of internal AI skill sets or none at all,while 22%report moderate ski

142、lls and 14%report strong skills.2024 Digital Banking Report.All rights reserved.PAGE 28 STATE OF AI IN BANKING CHART 15:CHART 15:EXISTING AI SKILL LEVELS ARE LOW WITHIN BANKING What level of digital banking maturity exists across your organization?45%22%19%14%Strong skills Moderate Relatively low le

143、vel Low/no AI skills skills of internal skill-sets internally Source:Digital Banking Report Research August 2024 Digital Banking Report Our fndings suggest an urgent need for targeted training programs to enhance AI capabilities within banking institutions.Partnering with educational institutions an

144、d investing in continuous learning can help bridge the skill gap.Furthermore,banks may also need to focus on attracting and retaining AI talent.Competitive salaries,career development opportunities,and a strong culture of innovation can make banks more attractive to top AI professionals.2024 Digital

145、 Banking Report.All rights reserved.PAGE 29 STATE OF AI IN BANKING Gen AI:The Bridge to Engagement and Loyalty 2024 Digital Banking Report.All rights reserved.PAGE 30 STATE OF AI IN BANKING Gen AI:The Bridge to Engagement and Loyalty To drive enduring customer engagement leveraging AI,fnancial insti

146、tutions must address adoption hurdles like trust and infrastructure readiness,the capabilities to enhance education,anticipatory guidance,and cross-channel orchestration.Every generation has fnancial needs that differ from previous and future generations.A Millennial may be on their second or third

147、job,be married with 1-2 children,and own 1-2 cars,and a house.Unfortunately,this broad defnition of a generation doesnt effectively identify their fnancial needs.Some may be renting and living paycheck to paycheck,while others may be looking for investments to secure their fnancial well-being later

148、in life.At each fnancial juncture in a persons life is a world of potential for fnancial institutions.An AI-powered mobile notifcation could sense an opportunity for personalized education,or a targeted product,delivered at a time of need.Evidence of awareness by a bank or credit union at a pivotal

149、point in a consumers life,maybe offering a tailored video tutorial or an interactive chat could empower this person with a very important lesson in fnancial literacy.Moments that build potential lifelong relationships occur every day yet banks and credit unions often miss them amidst the transaction

150、al aspects of traditional banking.Generative AI holds the promise STATE OF AI IN BANKING to help fnancial institutions create vastly deeper relationships by pinpointing opportunities,then generating the optimal content and engagement strategy for every unique customer.The Dawn of Generative AI Era C

151、onversational interfaces like ChatGPT hint at AIs impending impact on customer experience.Beyond rote service queries,these new tools provide expanding capabilities for contextual,intuitive interactions.And with the ability to learn rapidly each iteration reveals enhancements refecting consumer usag

152、e and trends.Generative AI represents the vanguard of experience personalization.Human-like language models can create boundless volumes of customized conversations,educational explanations,marketing messages and advisory recommendations tailored to individual fnancial contexts,profles,goals and kno

153、wledge levels.They bring relevance at speed and scale.Current successes on this frontier span industries.Netfix employs AI to generate thousands of personalized movie trailers from a single flm.Disney uses it to allow performers to converse with visitors in recognizable character voices.Australias f

154、ourth-largest bank ANZ recently introduced a home loan explainer bot that breaks down the intricacies of mortgages into simpler conversational language based on the customers familiarity with the complex product.For fnancial marketers seeking resonance,creative AI will soon transcend human capacity

155、to deliver hyper-relevant experiences at the time of need,similar to how a GPS device provides a roadmap to a specifc destination.The State of Banking Personalization Unfortunately,most banks have miles to go before reaching personalized engagement profciency.Bain research last year found a signifca

156、nt“relevance gap”persists between what customers expect from personalization and what banks deliver.Less than one-third believe their bank understands their needs and 2024 Digital Banking Report.All rights reserved.PAGE 31 2024 Digital Banking Report.All rights reserved.PAGE 32 STATE OF AI IN BANKIN

157、G -CHART 16:preferences thoroughly enough to deliver tailored solutions,indicating most efforts remain superfcial thus far.The impact of this lack of understanding is an increasing level of“silent attrition”as customers expand the number of fnancial institutions they use.CHART 16:THE EVOLUTION OF AI

158、-POWERED CUSTOMER SERVICE AI-enabled customer service is maturing rapidly.Enabled by Generative AI Self service for simplest transactions1 Self service for simple journeys2 Human-like self service for more complex journeys Proactive AI-enabled support for most journeys AI-enabled continuous assistan

159、ce for all journeys 3 4 5 Contact center App Online portal Basic chatbots Natural-language interactive voice response Robotic process automation Versatile and human-like voice bots and chatbots Agents augmented with AI Bots indistinguishable from humans customized to customer profle Proactive outrea

160、ch Fully customer-centric assistant Predicts needs,solves problems,and makes suggestions for customers Source:BCG Analysis August 2024 Digital Banking Report Part of the dilemma is data itself.Financial institutions possess expansive transaction logs and engagement history at the core of contextual

161、personalization.But insight teams report ongoing challenges harnessing siloed information from disparate systems to inform integrated strategies.Engineering legacy infrastructure for analytics heightens complexity.Adding second-party data enriches profles but raises governance considerations.While e

162、xternal signals create comprehensive pictures of embedded lifestyle preferences on social platforms or browsing habits,ethical questions around consent and transparency emerge.That said,research shows that illustrating empathy and using data for the beneft of customers will open the door for greater

163、 use of expanded insights.Compliance risks also lead risk-averse banks to avoid personalized recommendations in messaging.Broad sloganeering around“better rates”or“earn more”persist despite access to details on actual deposit or loan balances that could inform specifc savings advice tailored to a ho

164、usehold.Providing individualized fnancial guidance at scale remains technologically immature.2024 Digital Banking Report.All rights reserved.PAGE 33 STATE OF AI IN BANKING“Whether struggling customers appreciate aid privately to avoid embarrassment or publicly to catalyze support,fnancial institutio

165、ns providing that real-time compassion differentiate relationships through data-enabled empathy and support.”More than ever,Generative AI awakens new possibilities to resolve each obstacle but only for those bold enough to adopt early.How AI Boosts Relevance Applied prudently,here are four ways lead

166、ing fnancial institutions can leverage Gen AI to craft tailored interactions that foster enduring engagement across customer life cycles:1.24/7 Financial Literacy Education Contextual educational content at scale is the holy grail for banks seeking to build relationships around fnancial wellbeing.Ho

167、wever,manual subject matter creation requires tremendous resource investments.Enter AI Shared data environments allow models like ChatGPT access into reams of bank-approved information on products,markets,regulations and consumer fnancial needs.Cloud-based tools can synthesize learning materials per

168、sonalized to nuanced user profles at incredible volumes in near real time.ANZs home loan explainer chatbot uses AI to fll knowledge gaps with on-tap resources no branch trip required.OCBC Bank similarly employs AI to craft personalized fnancial tips based on spending behaviors,life stages and past q

169、ueries.Educational AI augments human advisors,allowing them to reserve specialized guidance for complex needs.But democratic access to information builds equality and trust.Participants feel empowered while institutions gain loyalty.2.Behavioral Insights for Proactive Care Gen AI soon wont just reac

170、t to inquiries,but will be proactive as illustrated by US Bank showing leadership by informing,protecting and advising customers that have unique fnancial situations.Sophisticated analytic engines use spending declines on routine services like daycare or streaming subscriptions to trigger tailored o

171、utreach addressing potential fnancial hardship.With further data integration,intelligent systems can anticipate consumer stress tied to late mortgage payments.AI then generates a pre preemptive notifcation checklist with customized assistance on restructuring options,local aid programs and relief so

172、urces specifc to that familys unique situation.Whether struggling customers appreciate aid privately to avoid embarrassment or publicly to catalyze support,fnancial institutions providing that real-time compassion differentiate relationships through data-enabled empathy and support.3.Predictive Inte

173、lligence for Preemptive Value Predetermined life milestones like my sons frst job,home ownership or my future retirement require signifcant but often overlooked fnancial shifts.Younger consumers especially need guidance navigating frst-time complex decisions on savings plans or major debt obligation

174、s.Missed opportunities to steer in these pivotal moments lead to relationship abandonment or missed opportunities for relationship expansion.But behavioral signals identify infection points.AI can scan shared datasets spanning spending patterns,web browsing,survey responses and more to accurately 20

175、24 Digital Banking Report.All rights reserved.PAGE 34 STATE OF AI IN BANKING“Most digitally mature organizations acknowledge much work remains translating promise into practical strategies at scale.The keys reside in governance,metrics,a willingness to embrace change,and patience for progress.”predi

176、ct major changes ahead.Generative tools craft communications addressing anticipated needs from branching into parenting and small business accounts months before delivery,to countdowns preparing for a cross-country move.When revealed preferences yield to AI foresight for timely utility,not hindsight

177、-based offers alone,marketing earns its place in customers lives.Algorithms spotlight moments where education,products and budgeting tools provide unique lifetime value.4.Optimized Multichannel Orchestration Despite access to robust data,most campaign personalization remains compartmentalized by cha

178、nnel,instead of centrally optimized based on cross-channel intelligence.This limits contextual relevance across touchpoints when digital experience barrages consumers daily.Generative AI now enables intricate,integrated segmentation where desktop web interactions inform the next best conversation fo

179、r a mobile app.Content can seamlessly evolve across advertisements,ATMs,statements,in-branch tablets,and call center scripts based on unifed customer data and predictive models.This provides unifed conversations across all distribution channels.Where human coordination of this orchestration complexi

180、ty breaks down,AI auto generation brings coherence.The most public-facing teams use these tools today for audience targeting.But their back-end application coordinating omnichannel messaging stands to accelerate returns on data for relevance.Overcoming Existing Barriers Despite the vast array of ben

181、efts,Gen AI ushers in as many apprehensions today as anticipations for supporters.This is especially true in fnancial services,where risk avoidance often stifes innovation and progress.Despite watershed advances,most employees with institutional knowledge on data governance and infrastructure comple

182、xity harbor doubts.Similar to questions revolving around deployment of cloud solutions fve short years ago,reassurance is required to compel laggard organizations support adoption.Frustrations certainly pervade early testing phases.Engineering usable data fows requires foundational upgrades,from API

183、s to reporting protocols enabling model feedback.User studies expose areas of fragility needing reinforcement through further training.But concerns show signs of subsiding as more organizations report positive results from initial applications.Orienting AI to enhance roles and activities frst call r

184、outing,then offine service documentation rather than wholly replace humans builds internal buy-in.As confdence grows,so do usage domains;USAA already reports high member enthusiasm for its AI assistant Eva felded across websites and apps to answer thousands of queries from its military community bas

185、e.Still,most digitally mature organizations acknowledge much work remains translating promise into practical strategies at scale.The keys reside in governance,metrics,a willingness to embrace change and patience for progress.But as more success stories emerge,the more skeptics will sign on to drive

186、transformation from within.2024 Digital Banking Report.All rights reserved.PAGE 35 STATE OF AI IN BANKINGThe Road Ahead for Generative AI and Banking How far along the adoption curve will fnancial institutions reach with Gen AI when todays middle schoolers look for personalized ways to save or under

187、stand the power(and risks)of credit?When industry leaders gathering at trade association meeting swap lessons learned,which case studies will they share?Many see a future state where sentient assistants shepherd consumers their entire fnancial journey.AI avatars evolve alongside households anticipat

188、ing decisions and nudging benefcial behaviors daily.They provide guardrails against fraud,relief in emergencies and expertise ensuring sound choices despite boundless freedom.Yet even the most progressive fnancial institutions foresee human advisors maintaining irreplaceable roles their compassion a

189、nd empathy during turmoil means more than even the most emotionally intelligent algorithms.Instead,the vision taking shape positions AI as amplifers allowing people to focus energy where it shines brightest.Behind intuitive tools,teams emerge unburdened by rote tasks made obsolete.Their expertise sc

190、ales.The time to move forward with Gen AI is upon our industry.How will we embrace the opportunity to change the lives and fnancial future of our customers?2024 Digital Banking Report.All rights reserved.PAGE 36 STATE OF AI IN BANKING About the Author Jim Marous Named as one of the most infuential p

191、eople in banking and a Top 5 Fin-tech Infuencer to Follow,Jim Marous is an internationally recognized fnan-cial industry strategist,co-publisher of The Financial Brand and owner and publisher of the Digital Banking Report.As a sought-after keynote speaker,author and recognized authority on disruptio

192、n in the fnancial services industry,Jim has spoken to audiences worldwide.He has been featured by CNBC,CNN,Cheddar,the Wall Street Journal,the New York Times,the Financial Times,the Economist,and the American Banker.Through his podcast,Banking Transformed,Marous provides listeners with an opportunit

193、y to hear about the organizational impact of digital transformation.With new shows each Tuesday,Jim interviews his guests with the objective of digging deeper into the opportunities and challenges facing banking and other industries.You can download Banking Transformed on The Financial Brand podcast

194、 page or on your favorite podcast platform.You can also follow Jim Marous on Twitter and LinkedIn or visit his professional website.About OpenText OpenText is the leading Information Management software and services company in the world.We help organizations solve complex global problems with a comp

195、re-hensive suite of Business Clouds,Business AI,and Business Technology.OpenText serves 19 of the top 20 Financial Services institutions globally.Unleash the power of AI and analytics to become a leading digital bank.For more information about Open-Text(NASDAQ/TSX:OTEX)click here:Operational Excellence in Banking|OpenText 04.25|248-000045-002