The proliferation of artificial intelligence (AI) has afforded banks a multitude of benefits through its automation capabilities, such as efficiency gains, cost savings, and a boost for product innovation and development. New research from Omdia highlights the foremost AI use cases in banking, projecting significant revenue growth and transformative impacts.
Virtual Assistants Leading AI Use Cases
According to Omdia’s AI in Financial Services (FS) report, virtual assistants are the most prevalent AI use case in terms of software revenue, expected to generate over $2.7 billion for IT vendors by 2028. Initially utilized primarily for internal purposes, the trend is shifting towards enhancing front-office interactions, with nearly half of retail banks prioritizing consistent and sophisticated customer engagement through contact centers.
Key Insights:
- Revenue Projection: Virtual assistants projected to generate $2.7 billion by 2028
- Shift in Use: From internal purposes to enhancing customer interactions
- Industry Perspective: Philip Benton warns of potential customer alienation if not executed effectively
Fraud Detection and Mitigation
Fraud detection and mitigation remain critical AI use cases in the financial services sector, particularly as fraudsters increasingly leverage AI to exploit vulnerabilities. Omdia predicts AI software revenue for fraud detection will reach $1.1 billion by 2028, with a CAGR of 16% from 2023 to 2028. Predictive AI is expected to dominate this area, focusing on identifying and mitigating fraudulent activities.
Key Insights:
- Revenue Projection: AI for fraud detection expected to reach $1.1 billion by 2028
- Growth Rate: 16% CAGR from 2023 to 2028
- Predictive AI: Key focus on fraud management
Generative AI in Wealth Management
Wealth management firms are increasingly implementing generative AI to enhance client service and operational efficiency. This technology aids wealth managers in streamlining internal searches and developing relevant research tailored to client needs. AI is also being deployed for investment research, market analysis, and portfolio construction and rebalancing, significantly aiding financial institutions.
Key Insights:
- Use Cases: Streamlining internal searches, investment research, market analysis
- Expert Opinion: Andrew Brosnan notes the growing deployment of AI in financial institutions
Omdia’s research underscores the transformative potential of AI in the banking sector, particularly through virtual assistants and fraud detection. As banks and financial institutions continue to integrate AI technologies, they must balance innovation with customer experience to maximize benefits and minimize risks. The forecasted revenue growth highlights the significant impact AI will have on enhancing efficiency, reducing costs, and driving product innovation in the financial services industry.