AI in Focus: Banking Institutions Contemplate Artificial Intelligence
In the realm of banking, discussions surrounding Artificial Intelligence (AI) have gained significant traction over the past few years. A recent report analysing the earnings of 13 major banks from the start of 2021 revealed a substantial increase in the mentions of AI.
Between 2021 and 2024, the rate of AI mentions in banks' transcripts rose significantly, reflecting the growing interest and investment in AI technologies within the financial sector. The focus areas and specific applications highlighted in these calls include trade reconciliation automation, client information summarization, code generation, financial document summarization, credit scoring, bankruptcy prediction, and event detection.
For instance, Bank of America uses AI to reconcile trades, streamlining complex back-office processes and reducing operational costs. Leading firms like BlackRock, Bank of America, and American Express apply AI techniques such as unsupervised topic modeling and extractive summarization on earnings calls and filings for better insights without heavy supervision.
Investment data shows a sharp rise in capital going into AI-related ventures, with 27% in 2021 increasing to 49% in 2024, indicating a heightened strategic focus on AI technologies in banking and finance sectors overall.
The emphasis in these earnings calls is not only on efficiency gains and cost reduction but also on expanding the use of AI to improve financial forecasting, operational processes, and client relationship management. However, some CEOs have expressed concerns about over-reliance on AI for headcount reductions without fully considering broader consequences.
By the first half of 2024, the total number of AI mentions across the 13 banks had risen to 38, with Bank of America discussing AI 32 times, followed by JPMorgan Chase (22), Goldman Sachs (13), and Wells Fargo (13) jointly in fourth place. BNP Paribas discussed AI the most, at 46 times.
Interestingly, three banks - Barclays, Standard Chartered, and Societe Generale - did not mention AI at all during the analysed period. The report did not provide new information about these banks or the number of banks that did not mention AI at all.
A landmark report on banks' cross-border payments operations was published last week, which included insights into the discussion of artificial intelligence by these banks. The use of AI is not limited to specific applications but is broad and variable across different banks.
[1] "AI in Banking: A New Era of Efficiency and Innovation", The Financial Times, 2024 [2] "Artificial Intelligence in Banking: Transforming Operations and Services", McKinsey & Company, 2023 [3] "Investment Trends in AI for Banking and Finance", PwC, 2024
Technology has become increasingly integral to banking and business, with artificial intelligence (AI) being a significant focus area. Reports suggest that, from 2021 to 2024, AI mentions in banks' transcripts rose substantially, indicating increased investment in AI technologies within the financial sector. As seen in Bank of America's implementation of AI for trade reconciliation automation, and firms like BlackRock, Bank of America, and American Express employing AI techniques for Business Intelligence purposes, the application of AI is diverse and expanding. This trend is also reflected in the rise in capital being directed towards AI-related ventures, as detailed in the "Investment Trends in AI for Banking and Finance" report by PwC (2024). [1] [2] [3]
