NTT DATA report reveals rise in AI adoption in banking

NTT DATA has published a new global research report titled "Intelligent banking in the Age of AI" that explores the utilisation of generative AI (GenAI) in the banking sector globally.

The report indicates that financial institutions are increasingly adopting GenAI, viewing it less as a possibility and more as an eventual necessity due to its potential to integrate intelligence throughout the banking ecosystem from core operations to customer-facing services. According to the findings, 58% of organisations are now fully embracing GenAI, a significant rise from 45% in 2023.

Robb Rasmussen, Head of Global Marketing & Communications at NTT DATA, remarked: "Generative AI represents a pivotal moment for the banking industry. While the potential benefits are enormous, the challenges of implementing GenAI are complex and varied, requiring careful navigation and a structured approach. Given the anticipated high spending on GenAI, achieving a return on investment is crucial. Many banks will be expecting GenAI to drive long-term savings by automating IT tasks, improving operational efficiency, and creating competitive advantages, but it's important to note that achieving meaningful ROI requires a clear strategy, tailored implementation, and robust governance at the same time."

There is a noticeable division among banks regarding the strategic outcomes expected from GenAI. Half of the banking leaders consider it as a tool for enhancing productivity and efficiency, while a similar proportion sees it as a means of reducing operational IT costs. Regional differences are evident, with US banks focusing more on reducing IT budgets, and European banks prioritising productivity.

The NTT DATA research notes that financial institutions are deploying various key performance indicators to gauge the effectiveness of their GenAI initiatives. In the Asia-Pacific region (APAC), 58% are measuring improved productivity and efficiency, 57% aim to achieve a competitive edge, and 51% focus on cutting costs and reducing IT budgets. Comparatively, US and European banks emphasise different priorities.

Robb Rasmussen further commented on the strategic challenges faced by banks: "It is clear that ability to balance innovation with fiscal responsibility will define success for banks. However, many banks are lacking in maturity when it comes to this technology and are unsure where to start. Partnering with systems integrators can be a good starting point, allowing them to access the latest knowledge while ensuring compliance with industry regulations. By working with specialised providers, banks can ensure that GenAI implementations can deliver the desired ROI, while maintaining robust data protection measures and meeting both internal security standards and regulatory requirements."

The research highlights significant variation in how different regions approach the integration of GenAI. While some organisations focus on collaboration between human capabilities and AI, others aim for full automation to minimise human involvement. This strategy is more popular in regions like Japan and the Americas.

The report delves into specific segments of the banking industry, such as Payments, Wealth Management, and Fraud Prevention, offering insights into how GenAI is poised to transform these areas.