NTT Report shows banking sector split on GenAI’s impact

• 58% of banking organizations have implemented GenAI (up 13% from 2023), but the sector remains divided on its benefits for efficiency and cost reduction
• Regional differences emerge in GenAI adoption strategy: US banks (59%) focus more on IT cost reduction, while European banks show less emphasis on productivity improvements through GenAI

NTT DATA, a digital business and IT services provider, has released a new research report exploring the use of generative AI in the global banking sector. The report, ‘Intelligent banking in the Age of AI,’ highlights a division in the banking industry’s views on the impact of GenAI technology. Although GenAI’s adoption continues to increase in the banking sector, financial institutions are divided on whether it leads to improved efficiency and productivity, or helps reduce operational IT costs.

According to the report, 50% of banks believe GenAI can be used to improve productivity and efficiency, while 49% consider it beneficial for reducing IT expenditure.

In theory, the banking sector benefits from a wealth of opportunities through GenAI with its power to introduce advanced intelligence into all aspects of the banking industry. It has already proven beneficial in optimising some aspects of the banking ecosystem from handling transactions to operating apps and websites.

According to NTT DATA’S research, 58% (6 in 10) organisations have already implemented GenAI, up 13% from 2023, marking a growing trend of banking institutions adopting advanced AI technologies in their operations.

Head of Global Marketing & Communications at NTT DATA, Robb Rasmussen, commented on the impact GenAI can have on the banking industry, as well as the challenges faced when adopting such technology.

“Generative AI represents a pivotal moment for the banking industry. While the potential benefits are enormous, the challenges of implementing GenAI are complex and varied, requiring careful navigation and a structured approach,” he said.

According to Rasmussen, ROI is important when considering the high costs of GenAI implementation.

“Many banks will be expecting GenAI to drive long-term savings by automating IT tasks, improving operational efficiency, and creating competitive advantages, but it’s important to note that achieving meaningful ROI requires a clear strategy, tailored implementation, and robust governance at the same time.”

While achieving a ROI is a major focus for banks when integrating GenAI, there is still a divide in how banking leaders view the most effective strategies for using the technology. Historically, banks have struggled to improve productivity, and GenAI is seen as a potential solution. However, only half of banking leaders believe it will be effective in solving productivity issues, according to NTT DATA’s report.

Similar to the 49% who don’t believe GenAI can improve IT cost optimisation, there seems to be a split in perspectives, emphasising uncertainty or differing views in the banking sector on how beneficial GenAI will be in achieving these goals.

Robb Rasmussen spoke of the challenges and strategies for successfully implementing GenAI, saying, “It is clear that the ability to balance innovation with fiscal responsibility will define success for banks. However, many banks are lacking in maturity when it comes to this technology and are unsure where to start.”

Rasmussen suggests that partnering with systems integrators, of which NTT is one, can help banks navigate the complexities of GenAI adoption. He said it could be “a good starting point, allowing [banks] to access the latest knowledge while ensuring compliance with industry regulations.”

NTT DATA’s research was conducted globally, surveying 810 financial leaders from all global banking markets. The disparity regarding the effectiveness of GenAI can be seen worldwide, with 59% of US banks being more focused on reducing IT and operations budgets, and 47% aiming to reduce or minimise operations costs.

In contrast, just 43% of banks in Europe are overly concerned with IT budgets, while only 36% are focused on reducing operational costs. Productivity remains a factor for European banks, with 46% highlighting it as a priority. Nevertheless, compared to their US and APAC counterparts, Europe’s banks place less emphasis on improving productivity through GenAI.

The report’s data reveals differing strategies for realising the benefits of GenAI in certain organisations and regions. 51% of the respondents said they focus on collaboration between humans and AI, with 47% taking a hybrid approach and have systems already in place.

That being said, 28% of the banks surveyed aim to achieve “full automation” of certain tasks, eliminating the need for any manual input or human intervention. The hope is that this will streamline processes and improve efficiency.

On a global scale, the full automation of tasks in the banking sector also shows mixed opinion. In Europe and the UK, around a quarter of banks are planning on fully automating processes, while around a third of US and Japanese banks have the same goal.

Mass implementation of GenAI in the banking sector is underway, but challenges remain. While some banks are seeing the early benefits of the technology, others are struggling with certain hurdles, like implementation complexities, and ensuring a clear ROI. As NTT DATA’S report suggests, strategic approaches and collaborations are required to ensure the positive impact of GenAI in the sector.

See also: Using serverless solutions to harness generative AI capabilities

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