Updated: Aug 26, 2022
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Compared to some sectors such as automotive or life sciences, financial services are lagging behind in terms of AI maturity.
However, Artificial Intelligence combined with research information and data can provide interesting results to address the current challenges of our time.
Interesting use cases include understanding customer sensitivity to prices and inflation, geopolitical forecasting and new scenarios modeling, improved forecasting of scarce commodities for customers, climate change risk prediction and adaptation, collecting and aggregating data for ESG investments more effectively, etc. ...
But in financial services, the impact on the business performance is considered low. Only 30% of all AI pilot initiatives are scaled to deliver wide-ranging outcomes.
Out of outside of certain operational limits already known ( e.g regulatory and legal framework, data infrastructure readiness), here are common faults in thinking.
COMMON MISCONCEPTION ABOUT AI
When you talk about AI, C-level executives see it as "just another IT tool" and delegate it.
AI = Just another IT Tool
So AI projects are managed only in small, isolated teams composed mainly of business, data & AI managers. Without strong involvement of the leadership team!
LACK OF AI KNOWLEDGE IN THE LEADERSHIP TEAM
In financial services, only 5% of CEOs have held IT leadership roles prior to their appointment.
Thus, without strong IT background and proper education on AI, leadership roles are not fully aware of the potential of the various technologies involved and the potential implications for their business.
They tend to use general information, sometimes buzzwords, delegating it to a group of experts.
THE NEGATIVE SPIRAL
The economy depends on people creating value and others recognizing that value and agreeing to pay for it.
Given the low scalabilility of AI to date, many people have a reduced ability or confidence to invest in this evolving technology.
As a result, there is less spending. This creates a negative feedback loop that further reduces people's ability and confidence to spend money on AI.
THE WAY FORWARD
Now it's time to act and move forward:
AI is a key part of digital transformation. FS leaders are aware of digital transformation and can imagine their future. But all the steps to achieve it are not yet clear !
Understanding the organizational changes required by your business requires that your leaders share a fundamental and solid understanding of the nature of the technology involved and its potential.
What are the different technologies used in the AI space? What are the use cases in your industry? What are the implications of using AI for your business? how to design future with data and AI ? and how will it influence your business model in the future? how have competitors used it (e.g. for open banking)? ..
In addition to enabling teams to adopt AI, understanding and demystifying AI is critical to gaining acceptance, reducing fears, and starting to think about the potential of AI for your digital transformation.
Putting AI at the heart of leadership responsibilities
As leaders, you must set the tone for the business and define the direction of future and to which extent AI and data could deliver results
As leaders and CEO, you are responsible for the company's mission and values to all stakeholders: employees, customers, governments, shareholders and society.
In particular, you need to be mindful of new business opportunities, new potential threat to your business, new risks that could impact not only the financial results but also the reputation of the company and AI can be part of that.
RESPONSIBLE LEADERS CREATING RELEVANT VALUE FOR FUTURE
If leaders understand the value and risks of AI, the impact on their business, they will be in a better position to make responsible decisions, mitigate risks, trigger effective action, meet regulatory requirements (e.g. AI regulations) and deliver value to their stakeholders.
Instead of fear, we need leaders who are stepping into the unknown, and who are leveraging AI and data to create real, responsible and relevant value.
AI can create value and risks to your business, your customers, your employees, society and the economy at large.
That's how it works in good times... and that's how we can recover in difficult times!