AI to Boost Global Banking Profits by $170 Billion by 2028, Says CITI Report
Artificial intelligence (AI) is set to revolutionize the global banking sector, potentially increasing profits by USD 170 billion or 9% by 2028, according to a report by CITI. AI is being termed as the General-Purpose Technology (GPT) of the 2020s-2030s, with a transformative impact on finance.
Combating Financial Fraud
One of the most compelling aspects of AI highlighted in the report is its role in combating financial fraud. AI-generated insights can prevent real-time payment scams, such as Authorized Push Payment (APP) fraud. In the UK alone, APP fraud accounts for 40% of banking fraud losses, with projected costs reaching USD 5.25 billion across the US, UK, and India by 2026 if unchecked.
Regulatory Approaches
Countries like the European Union, China, and Singapore have emerged as early adopters of AI regulation in finance. The United States has taken a cautious approach, lagging behind in regulatory initiatives. India initially adopted a non-regulatory stance in early 2023 but is considering comprehensive AI laws by mid-2024.
Economic Impact
AI promises substantial gains in developer productivity, potentially boosting efficiency by 10-50% and translating into annual savings ranging from USD 2 to USD 16 billion in the US banking sector alone. This efficiency gain is driven by advancements in AI-driven software solutions that optimize tasks traditionally handled by technology staff.
Broader Implications
The report underscores the broader implications of AI as a GPT, likening its potential to the industrial revolution’s steam engine and the internet age’s transformative power. AI is expected to commoditize human intelligence through enhanced analytical capabilities, decision-making processes, and content creation, ushering in a new era of economic growth while disrupting existing norms and industries.
As financial institutions worldwide navigate the AI revolution, adapting to technological advancements and regulatory landscapes will be crucial in harnessing AI’s full potential while safeguarding against potential pitfalls. Stakeholders across sectors are called upon to engage proactively in shaping AI’s ethical, legal, and economic implications for a more inclusive and sustainable future.
