The Slow March of Retail Banks Towards AI Transformation

In a recent study released by the Capgemini Research Institute, it was revealed that a mere 6% of retail banks have a concrete strategy for implementing AI-driven transformations across their organizations. This insight comes despite a convincing majority—80%—of retail bank executives acknowledging the game-changing potential of generative AI for the advancement of artificial intelligence technology. This paradox highlights a significant gap between recognition and readiness within the banking sector.

Surprising Lack of AI Preparedness

The report, marking the 20th anniversary of the World Retail Banking Report, uncovers the sobering reality of how unprepared most banks are for the future of intelligent banking. With an intricate assessment of 250 retail banks worldwide, only 4% secured high marks for their business commitment and technological capabilities regarding AI adoption. Conversely, a significant 41% of these banks were deemed to have only average capabilities, suggesting a widespread unpreparedness for AI-driven transformation.

Geographical Disparities in AI Readiness

Further examination of regional differences within the banking sector shows varying levels of AI readiness. In North America, about 27% of banks exhibit low preparedness. This figure is slightly higher in Europe, at 31%, and even more pronounced in the Asia-Pacific region, where a concerning 48% of banks fall behind in readiness. This disparity comes amid economic uncertainties prompting retail banks to reassess and recalibrate their existing business strategies to maintain relevance and efficiency.

Investing in Digital Transformation

Despite this wake-up call, there is a committed investment in digital transformation, with 70% of banking CXOs indicating plans to boost their digital transformation budget by up to 10% in the next year. However, this investment may not sufficiently address the need for a holistic and strategic approach to integrate advanced technologies like AI and machine learning—key components of intelligent banking transformation.

AI, banking, transformation