Remember when discussions of AI did not dominate most business conversations? Me neither!

While I was at Money 20/20 at the end of October, I had the chance to share new global research from Avanade on the state of AI in banking. Some key findings:

More than half of bankers believe process automation, improved efficiency and reduced errors from manual, repetitive activities will be the key benefits they expect to see from applying generative AI tools, such as Microsoft 365 Copilot, to their business processes.
The most exciting use cases include new account opening, fraud detection and automation of risk, regulation and compliance risks.
More than one-third, the highest of all surveyed sectors, cite AI’s ability to inform strategy and decision-making, followed by efficiency improvements and creation of an improved customer experience.

At the same time, our research showed that survey participants also realize that AI’s use beyond basic routine automation will require thought, preparation and governance.

“The operating committee and the board level are not folks who traditionally understand technology,” one U.S. banker said. “Leadership has excitement about the potential of AI, but don’t necessarily understand what it means to be AI-ready. … We are using applications that still need to be modernized to be cloud ready.”

“If you were to insert generative AI anywhere along our pipeline, we have to get the regulators comfortable,” said another.

It’s clear to me that the banking industry is ready to embrace AI but, as with any new and rapidly evolving technology, especially in a highly regulated sector like financial services, it can be easy – and to be honest, appropriate – to feel overwhelmed. Luckily, this isn’t an all-or-nothing situation. Based on Avanade’s own experience using AI internally and with the work we’ve done with our clients around the world, we’ve got real-world common-sense and risk-adverse ways to begin to experience the benefits of AI. A few of my favorites:

Customer service

AI-powered chatbots, which speak in ways that sound natural to the ear, can quickly and accurately handle routine inquiries, provide account information, and assist with basic transactions.
AI can analyze customer data and provide personalized recommendations, allowing banks to make their interactions more personal, which in turn leads to increased customer satisfaction and loyalty.
Similarly, analysis of customer preferences can enhance marketing effectiveness and even lead to development of new services and products.

Fraud detection and security

AI can analyze large volumes of transaction data in real-time, identifying patterns indicative of fraud more effectively than traditional methods, enhancing security and reducing fraud-related financial losses.
Replacing traditional password-based customer account access systems with AI-powered biometric authentication methods, such as facial recognition or fingerprint scanning, also increases security and reduces financial risk.

Process automation

Automating repetitive and rule-based tasks – data entry, transaction processing and compliance checks – reduces operational costs, minimizes errors and speeds processing times.
Machine learning models can analyze a wide range of data sources to more accurately evaluate a customer's creditworthiness, allowing banks to make more informed lending decisions and reduce the risk of defaults.

I’m excited about the opportunities that AI offers for the financial services industry in the coming weeks and months. The key, as with any powerful emerging technology: make sure appropriate governance is in place, start with pilot projects, ensure that AI applications align with business goals and regulatory requirements, invest in employee training and foster a culture that embraces AI technology is crucial for a successful implementation. There’s lots to be done!

Learn more about AI in financial services:

Read the Avanade AI Readiness Report
Sign up for an AI Organizational Readiness Workshop

Speaking of AI…