Leading use cases relate to process optimization, customer experience, and operational efficiency
The market for AI-based software in financial services is estimated to grow from $2 billion in 2020 to $9.1 billion in 2025, according to research firm Omdia.
Between 2020 and 2025, software vendors are projected to generate an estimated $32 billion in revenue from their AI-powered solutions.
The leading use cases, expected to generate the most revenue, relate to enabling process optimization, enhanced customer experiences and interactions, and improving operational efficiency.
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The financial services industry, including banks, investment firms, credit unions, and fintech companies, has been an early adopter of big data, analytics, and AI.
AI use cases in financial services are being driven by the benefits of reduced costs, improved scalability, and efficiency. Financial organizations have to meet an increase in demand for optimization and automation, an increased desire for personalization, and the need for increased security and privacy, according to Omdia.
However, barriers to AI adoption remain, including unrealistic expectations about the capabilities of AI, a lack of experienced talent, questions about algorithmic fairness, and change management issues.
“Forward-thinking financial services firms have made AI a priority, focusing on process optimization, efficiency, and customer service,” Omdia analysts stated in the report. “ML has been deployed across specific uses cases that can deliver both hard ROI and soft, customer service-based benefits to customers.”
The global pandemic, along with the competition for customers and business, is helping accelerate the time frames for AI-powered automation projects.
AI solutions can lead to more robust customer engagements, more efficient processes and operations, and an overall streamlining of business.
AI-powered projects in financial services include those in fraud and security services, a current focus for parts of the investment community.
For example, British startup ComplyAdvantage, which develops AI systems to detect financial crime, recently raised $50 million to improve technology to detect and mitigate complex risk exposure in the financial industry.
Omdia noted that software vendors favored by financial services firms typically have expertise from successful client engagements, or feature experienced staff with backgrounds in financial services, with specific financial services insights becoming a key selling point.