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‘Excited’ finance firms pump money into digital technology
Over three-quarters of finance firms are currently restricted in what they can spend on technology due to the global economic climate, but expect spending to resume next year
According to Finastra’s Financial services: State of the nation survey 2023, technology investment is currently constrained for 78% of financial institutions, but 69% expect investments to resume in full in the first six months of 2024.
In fact, 87% of almost 1,000 global banks questioned by Finastra said they were excited about the pace of change in relation to the latest fintech.
One area of interest is generative artificial intelligence (GenAI). Most banks (83%) are interested in what it can offer their businesses, with over a quarter having already invested in the technology. Only 6% of firms are not interested in using GenAI technology.
The survey revealed that interest is increasingly converting to action, with 37% of respondents having improved or deployed AI technology in 2023, up from 30% in 2022.
About a third of banks said GenAI would be used to provide personalised services to customers.
The most common uses for GenAI at banks include automating manual or repetitive tasks; collecting, processing and analysing data for know your customer or anti-money laundering purposes; and improving risk management and decision-making processes.
Financial services businesses are also investing in banking as a service (BaaS) and open finance technologies.
Nearly half (48%) of respondents had deployed BaaS or improved their capabilities in this area in 2023, compared with 35% in 2022, while 85% said open finance was having a positive impact on the industry.
Most (85%) said at least a quarter of their customers are using open banking-enabled services and 46% said over half of their customers are using them.
“Despite the challenging economic climate, it’s clear from our research that investment in AI, BaaS and embedded finance remain key priorities for financial services organisations over the next 12 months, particularly as they seek to further enhance and personalise the customer experience,” said Simon Paris, CEO of Finastra.
“We share the industry’s ongoing commitment to ESG [environmental and social corporate governance] initiatives, to collaboration around open finance, and excitement in using advanced technologies like AI to help deliver on the opportunities ahead,” he added.
However, generative AI is expected to take over the jobs of three-quarters of current financial services executives, according to a separate survey by FintechOS.
The survey of around 500 executives at major banks and insurance companies revealed that 73% of executives believe GenAI will “eventually” take over their jobs.
The FintechOS survey revealed that 57% expect GenAI to lead to a 30% reduction of financial services companies’ workforces over the next three years. It also revealed an even split between executives who consider generative AI a friend and those who see it as a foe.
