More and more financial institutions are embracing AI
JPMorgan may have restricted employee use of ChatGPT, but the broader financial services sector can’t escape the AI buzz.
A new survey from FICO and Corinium solicited responses from C-level AI and data leaders at 100 major banking and financial services institutions in the US and Canada, finding overall that demand for AI tools and processes seems to have accelerated faster than the implementation of responsible AI initiatives.
Half of those surveyed said that demand for AI products is higher than last year, while 71% said AI ethics and responsible AI isn’t a core part of the operational strategies at their organizations. Just 8% of leaders said their AI strategy was “fully mature, with model development standards consistently scaled across their organizations.”
“From a financial services perspective, that was surprising,” Scott Zoldi, FICO’s chief analytics officer, told us. He added, “Another interesting stat from the report was that 27% haven’t even established their strategy for responsible AI…Those sorts of stats were particularly surprising—I would’ve hoped it would be a little bit further ahead than the industry overall.”
Without a robust, responsible AI model development strategy, the race to adopt AI could be especially problematic in the financial services industry, as many companies build thousands of models, Zoldi said.
“When I talk to different data-science teams across our customer base, and my colleagues, they’re struggling with the fact that boards are often looking at the new tech and not really focusing on building this technology in a safe and responsible way,” he said.
Without model development standards in place, the tools could lead to real-world harms, Zoldi said. One example of such potential harms with financial services algorithms: An investigation into mortgage-approval algorithms by The Markup found that in 2019, loan applicants of color were between 40% and 80% more likely to be denied than similar white applicants.
The FICO and Corinium report also touched on some use cases. One of the main potential growth areas for AI in financial services lies in customer service and personalization, according to the report.
Some financial institutions have already jumped on the AI wave and embraced such applications. In August 2022, Truist, the new bank formed by the BB&T-SunTrust merger, rolled out its first-ever AI assistant to all customers. In October, Wells Fargo announced it would introduce a new chatbot powered by Google Cloud’s AI tools. And that same month, Bank of America announced that its AI assistant surpassed 1 billion client interactions.
Looking ahead, Zoldi predicted that from a “regulatory and a consumer-awareness perspective…responsible AI usage will become more and more a top priority” for many companies—e.g., developing more mature AI strategies and scalable ethical standards for models. Companies that invest in a responsible AI strategy are likely to see material differences in customer trust, he added, compared to those that do not.
“We consider it a board-level conversation,” Zoldi said, adding, “In the past two years, we saw digital and cloud enablement drive differences [in competition]...People that were leading on these technologies, cloud and digital, have really advanced much, much further than those who have been taking a more laggard approach. The same will apply here with the use of AI.”
LeackStat 2023
