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Why Faster-Growing Firms are Leading the AI Race in Financial Services

Cognizant in Financial Decoding Services Differences Growth Factor-Driven Faster-growing financial services firms are more committed to Al and have a better sense of its potential compared with their slower growing counterparts, our recent research shows. To advance their objectives, firms should craft business-driven strategies, enhance their data management, and embrace an experimental mindset, with a strong focus on creating and maintaining responsible Al. Al is clearly moving to the business mainstream - not only within financial services but across industries. But like in other industries, financial services firms are struggling to find strategic focus in their Al endeavors. This was made clear by the way they ranked and rated a wide range of potential Al implementation challenges in our recent study of 230 financial services executives in the U.S. and Europe. Collectively, financial services firms lack a strategic focus on Al ... Challenges in employing Al – percentage extremely or very challenging Companies with revenue growth much above industry average Companies with revenue growth somewhat above or lower than industry average 55% Securing senior management commitment 41% 56% Securing buy-in by businesses 38% 48% Securing adequate budget 42% 55% Measuring impacts 37% 52% Time required for generating benefits 37% 53% Securing talent 48% 59% Access to accurate and timely data 39% 59% Attracting and retaining professionals with Al experience and skills 45% Retraining employees whose job responsibilities have been changed or eliminated 51% 35% Addressing potential instances of unethical behavior in Al applications 49% 41% Developing contracts that address the risks that Al applications could make or support decisions with negative impacts on customers 48% 40% 56% Ability of employees to interact effectively with Al applications 31% 57% Interactions between different Al applications 44% Response base: 229 financial services executives in Europe and the U.S. Source: Cognizant Faster-growing firms are more optimistic about Al's ability to unlock business potential Major/significant benefits expected from Al's ability to introduce new products/services or enter new businesses over he next three years 82% 70% Companies with revenue growth much above industry average Companies with revenue growth somewhat above or lower than industry average Response base: 227 financial services executives in Europe and the U.S. Source: Cognizant They are also more optimistic about Al's ability to open new employment opportunities... Expected impact of Al on number of employees in company over next three years Increase No Change Decrease Companies with revenue growth much above industry average 63% 10% 26% Companies with revenue growth somewhat above or lower 43% 14% 43% than industry average Response base: 229 financial services executives in Europe and the U.S. Source: Cognizant ... and take ethical concerns more seriously than their slow-growing counterparts Critical/significant role of ethical considerations in Al adoption over next three years 68% 35% Companies with revenue growth much above industry average Companies with revenue growth somewhat above or lower than industry average Response base: 218 financial services executives in Europe and the U.S. Source: Cognizant They also have adopted a well-balanced mix of in-house development and other sourcing options In-house development vs. sourcing of Al apps Always or usually secure Al applications from vendors/ systems integrators A mix of developing Al applications in-house and securing them from vendors/systems integrators Always or usually develop Al applications in-house 12% 6% 42% 62% 45% 27% Companies with revenue growth much above industry average Companies with revenue growth somewhat above or lower than industry average Response base: 228 financial services executives in Europe and the U.S. Source: Cognizant Steps to Success Many financial services firms are still O experimenting with Al. To accelerate deployment, they must empower business leaders to embrace an overarching strategy that emphasizes the ethical use of AI, which is a core tenant of success. We recommend: Craft business-driven Al strategies. View the technology from a business lens, rather than as an IT adventure. Enhance data management. Ensure that all types of relevant data can be captured in a timely fashion and in an appropriate format. Adopt an experimental mindset. Al projects need to be rolled out quickly, simultaneously measuring returns, so failures are terminated promptly while successes are rapidly moved to production. Create and maintain responsible Al applications. Unwavering focus on the ethical development and deployment as Al algorithms learn and evolve over time. (For more on this topic, read "Making Al Responsible and Effective": https://cogniz.at/MakingAIResponsibleandEffective. To learn more, read our white paper "Al in Financial Services: From Nice to Have to Must Have"at www.cognizant.com/Al-in-Financial-Services © Copyright 2019 Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to changewithout notice. All other trademarks mentioned herein are the property of their respective owners. Codex 4974

Why Faster-Growing Firms are Leading the AI Race in Financial Services

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Outperformers are AI optimists, and are taking ethics more seriously while adopting a well-balanced mix of sourcing options.

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Cognizant

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Business
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