International. Artificial Intelligence (AI) is revolutionizing the banking sector by detecting fraud in financial transactions based on a predefined set of rules. In 2018, AI in the banking business was estimated at US$41.1 billion, which includes the cost savings and efficiency of introducing AI technology compared to maintaining existing infrastructures and processes.
With the projected increase in the number of AI projects being launched and implemented commercially, the commercial value of AI in banking is projected to reach $300 billion by 2030, according to global business information provider IHS Markit.
"The innovative capabilities that AI will bring to financial services will be transformative," said Don Tait, principal analyst at IHS Markit. "Artificial intelligence is ready to challenge and blur our computing concepts and the 'natural' human." This radical change will require both businesses and governments to develop expansive foresight and a critical understanding of the full effects of digitalization and emerging technologies."
According to IHS Markit's Artificial Intelligence in Banking Report, North America is projected to be the largest market for e-banking between 2018 and 2023. AI in the region will increase from a trade value of US$14.7 billion in 2018 to nearly US$79 billion by 2030 However, the proportional importance of the North American region is likely to decline between 2024 and 2030 as Asia Pacific, Europe and other regions of the world implement more AI solutions in the banking sector.
Asia Pacific is the second largest region employing AI in banking, rising from a trade value of US$11.5 billion in 2018 and becoming the leading region in 2024, with a trade value of US$50.6 billion. By 2030, the Asia Pacific region for AI in banking is projected to reach $98.6 billion by 2030. "Countries like China, Japan, South Korea, Hong Kong and Singapore will likely drive demand for AI within the banking sector over the next ten years," Tait said.
Nonetheless, the study indicates that the introduction of AI technology is not good news for the banking industry, as jobs are expected to be lost and jobs reassigned as AI increases company productivity. IHS Markit estimates that by 2030, around 500,000 bank workers in the UK and 1.3 million in the US could be affected. If this is reflected in every country in the world, there will be tens of millions of jobs in banking and financial services affected by the introduction of artificial intelligence technology in the next decade.
"Bank employees potentially affected by the introduction of AI include cashiers, customer service representatives, interviewers and loan secretaries, financial managers, compliance officers and loan officers," Tait said. "Overall, AI technology will reshape the structure of the financial industry, making the banking sector more human and intelligent."
Source: IHS Markit.
