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Only 6% of retail banks are ready for AI-based transformation

TECHNOLOGYOnly 6% of retail banks are ready for AI-based transformation

Eighty percent of retail bank directors believe that generative artificial intelligence represents a significant step in the development of AI technology. However, only 6% of these institutions have a transformation plan based on artificial intelligence. Furthermore, clients are noticing technological shortcomings. A stunning 61% of them expressed dissatisfaction with chatbot services. Can banks cope with the technology transformation? The results of the studies and the conclusions drawn from them are presented by Capgemini in the Global Report on Retail Banking 2024.

As a result of the uncertain macroeconomic situation, many retail banks, in order to meet the challenges associated with today’s business models, need to implement changes of strategic importance. Productivity and efficiency dominated the priority list of bank leaders. 70% of bank CXOs plan to increase investment in digital transformation by up to 10% in 2024. However, the Capgemini report suggests that banks are not ready to start and scale an intelligent transformation.

Banks Need to Act Quickly

For the report, Capgemini evaluated 250 retail banks in terms of various business and technological parameters. This allowed for an assessment of the maturity of the data infrastructure and the level of use of artificial intelligence-based mechanisms. It turns out that the majority of the surveyed institutions are not prepared for the development of intelligent banking of the future. Globally, only 4% of retail banks achieved a high score in terms of business engagement and technological capabilities, while 41% were at an intermediate level. This points to a widespread lack of readiness to adopt and effectively implement intelligent transformation. There are also differences between individual regions. In North America, 27% of banks showed a low readiness, in Europe – 31%, and the Asia-Pacific region (APAC) showed a significant delay – 48% of banks achieved a low score.

“Banks which focus on intelligent solutions based on artificial intelligence will be able to effectively face contemporary challenges. AI offers the necessary tools to transform banking operations and improve customer experiences. A long-term approach will ensure sustainable development to the most advanced institutions, strengthening their market position,” says Piotr Siuda, Head of Financial Services at Capgemini Poland.

However, success must be measurable: only 6% of the surveyed banks set clear KPI goals for themselves. Over 60% of the surveyed institutions are still identifying and developing KPIs, while 26% who have already chosen them do not measure their execution.

According to the report, banks may not be able to implement AI solutions on time. Only 2% of the management staff indicates that they regularly track the key performance indicators of generative artificial intelligence. Furthermore, 39% of banking executives express dissatisfaction with the results of their AI-based tools. To fix this, banks should consider solutions that will allow for tracking, monitoring, and reporting the actual impact of AI and generative AI when they are scaled up.

“In today’s world, banks need to quickly implement new technologies like generative artificial intelligence so that they don’t fall behind. It is important to use technologies wisely while ensuring they are understandable and transparent. This helps build customer trust. The key to success is finding a balance between AI capabilities and real, measurable action plans. In this way, banks can develop without losing their balance in a rapidly changing technological world,” says Piotr Siuda.

Cooperation with AI is Welcome

Generative artificial intelligence has a tremendous potential to increase efficiency and customer service quality. Seventy percent of bank employees focus on operational activities daily, which increases to 91% for client implementation teams. As a result, they have little time left to interact with customers. According to more than 80% of people working in banks, the effectiveness of already implemented automation in areas such as onboarding, loans, marketing, or customer contact is at a moderate level.

Bank employees are most enthusiastic about the potential of generative artificial intelligence in terms of fraud detection automation, data visualization and analysis, and the creation and sending of personalized content to customers. Banks, using the potential of AI-based tools, could optimize up to 66% of their specialists’ working time.

With AI, We Can Understand Chatbots

Due to the pandemic, a large portion of customer service moved to digital channels, and self-service tools such as chatbots gained popularity. Despite this change, bank customers often express dissatisfaction with the level of service. Nearly two out of three people (61%) asked for an agent’s help after contacting a chatbot. Seventeen percent of them declared a lack of trust in chatbots and simply preferred contact with a human.

Traditional chatbots lack the flexibility and adaptability of advanced AI-based systems. They are not capable of handling complex or unexpected inquiries. Over 60% of respondents rated their experience with chatbots as average. As a result, attempts to establish contact between a chatbot and a client are increasingly rejected, in 12% of Tier I banks and nearly 18% of Tier II banks worldwide. The solution to this problem is the implementation of the latest technologies. Banks should create intelligent contact centers that leverage chatbots by utilizing the capabilities of conversational artificial intelligence to assist people in their daily tasks.

“The banking sector, like all others, needs to embrace the latest technologies, not only in declarations but also in daily practice. AI-based solutions can certainly bring benefits to both people working in banks and their customers. However, for such a transformation to be effective, it must be started in time and well planned. And now is the time to take immediate action and outpace the competition,” concludes Piotr Siuda.

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