Intelligent banking transformation

The research highlights several critical insights:

• AI adoption and goals: While many banks are experimenting with AI, only a fraction have achieved significant revenue growth. The primary goals include cost reduction, enhanced customer experience, and improved decision-making.
• Challenges: Banks face numerous challenges, including data quality issues, regulatory compliance, and a lack of AI expertise. Overcoming these barriers is essential for successful AI integration.
• Phases of AI value: The report outlines three phases of AI adoption—Enable, Embed, and Evolve. Each phase represents a step towards fully integrating AI into banking operations, from initial pilots to enterprise-wide transformation.

To build an intelligent bank, KPMG recommends a structured approach:

1. Enable: This phase focuses on laying the groundwork for AI adoption. It involves appointing responsible executives, developing an AI strategy, and launching pilot projects. Building AI literacy and aligning with regulations are also crucial steps.
2. Embed: In this phase, AI is integrated into workflows, products, and services. This includes deploying AI agents, modernizing technology infrastructure, and fostering a culture of innovation and trust.
3. Evolve: The final phase involves transforming business models and ecosystems. AI is used to solve large-scale challenges, enhance customer experiences, and drive continuous innovation.

The report identifies four strategic actions that banks should take to maximize AI's value:

1. Design an AI strategy: Align AI initiatives with core competencies and strategic goals. Establish measurable objectives and foster cross-functional collaboration.
2. Build trust: Implement robust AI governance frameworks, prioritize ethical considerations, and ensure data privacy and security.
3. Create sustainable infrastructure: Invest in scalable, flexible technology infrastructure and comprehensive data management practices.
4. Uplift human potential: Develop an AI-literate workforce, address cultural resistance, and redefine roles to focus on higher-value activities.

Banks must balance the risks and rewards of AI adoption. Proactive risk management, strategic investments, and a clear vision for AI's role in the organisation are essential.

By taking these steps, banks can unlock AI's transformative potential and stay competitive in a rapidly changing financial landscape.