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      The Wide Angle – Artificial Intelligence: friend or foe for banks?
      WEDNESDAY, 07/02/2024 - Scope SE & Co. KGaA
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      The Wide Angle – Artificial Intelligence: friend or foe for banks?

      AI can boost the competitiveness and effectiveness of banks that are technologically, organisationally, and culturally advanced in digitalising and dismantling burdensome legacy structures. But it can be a foe.

      AI can deepen the competitive handicap for banks still struggling to move their business model into the digital age i.e beyond just digitalising legacy business models,

      In his latest The Wide Angle, Sam Theodore says he anticipates that banks will increasingly use predictive and generative AI as it offers substantial benefits to fraud detection and compliance, risk management, loan credit scoring and assessment, data security, market analysis, and investment management. It enhances the quality, speed, and effectiveness of customer relationships via 24/7 AI-powered chatbots, all clear wins for customers.

      Theodore notes that even though Europe is not a powerhouse in terms of AI development, many European banks are actively exploring AI routes and implementing AI processes. The sector's digital winners are fully competitive globally in terms of AI usage. The recently adopted AI Act makes the EU the world's most advanced region in regulating AI.

      However there remain significant challenges facing banks aiming to expand AI usage, including outdated technology, the lack of AI intellectual capital capacity, and board and top management comprehension and buy-in. Inherent risks related to AI adoption include cyber insecurity, AI bias, explainability, ethics, and customer mistrust.

      Another consequence of AI adoption is the impact on financial-sector jobs involving repetitive tasks, crunching numbers, analysing market trends or creating predictive models, which can all be streamlined by AI.

      Read the latest The Wide Angle.

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