AI to Transform the Future of Finance: Citi GPS Report Projects $2 Trillion in Global Banking Profits by 2028

  • Artificial Intelligence
  • 21.06.2024 11:10 am

Artificial Intelligence (AI) is poised to revolutionize the finance industry, potentially driving global banking profits to an astonishing $2 trillion by 2028, according to a newly released Citi GPS report. This represents a 9% increase in profits over the next five years, marking a significant milestone in the financial sector.

Much like the steam engine powered the Industrial Revolution and the internet ushered in the Information Age, AI is set to commoditize human intelligence. The finance industry, rich in data and rapidly embracing AI, is at the forefront of this transformation. The report highlights that AI will likely follow historical patterns of technological disruption, where long-established jobs and firms may vanish, only to be replaced by new opportunities and entities at a potentially accelerated pace.

Currently, Generative AI (GenAI) in finance remains in the proof-of-concept stage. However, the industry is undergoing rapid and unprecedented change. The Citi GPS report delves into imminent use cases for AI in finance and provides long-term projections based on insights from leading experts in the field.

Incumbent financial institutions are largely adopting AI by integrating it into existing products and using it to enhance productivity. Conversely, startups are leveraging AI to disrupt and unbundle traditional financial services. This dichotomy in strategies highlights the transformative potential of AI across the sector.

The rise of AI-powered agents, bots, and autonomous systems prompts crucial questions about the future of money and finance. How will these technologies reshape the fundamental concepts and structures of finance? In a world where machines transact with minimal human intervention, the landscape of money is set for dramatic change.

AI stands to significantly boost productivity in the banking sector by automating routine tasks, streamlining operations, and allowing employees to focus on higher-value activities. The report reveals that an overwhelming 93% of finance sector leaders anticipate higher profits from AI-driven productivity gains. Nonetheless, caution is advised regarding implementation timelines, talent costs, competition, rising client expectations, and the expenses associated with increased AI activity.

Transitioning to a bot-powered world also raises critical concerns around data security, regulation, compliance, ethics, and competition. The risk of AI models generating false information or chatbots going fully autonomous poses potential financial and reputational threats to organizations.

AI-driven clients may also intensify price competition within the finance sector, potentially shifting the balance of power. Digital-native, cloud-based firms like FinTechs and BigTechs are expected to adopt AI more swiftly, while agile incumbent banks may follow closely. However, many traditional institutions, burdened by outdated technology and cultural inertia, could lag in AI adoption, risking market share loss.

The trajectory of AI adoption follows a familiar pattern: initial hype, subsequent disillusionment, and eventual mass adoption. Since mid-2023, AI expectations have soared, but the gap between hype and widespread production remains substantial. As the financial sector navigates this transition, the question is no longer about AI’s potential for disruptive change but rather how it will manifest.

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