On the Cusp of Significant Change
It’s always good to know what’s coming over the horizon. It’s the reason why articles on ‘future trends’, ‘annual predictions’ and ‘what business would be like in 2030’ prove so popular. When we know what’s coming, we can plan accordingly. And it’s fun to try to keep one step ahead.
But sometimes what’s on the horizon is so seismic, and likely to cause such disruption, that it’s almost impossible to predict what will happen beyond it. For example, consider people making predictions about the business world in the years immediately prior to the internet boom. Without taking the internet into account, all other predictions would have been wildly, if not comically, inaccurate. Or what about when social media rose to popularity? Social media has had such a massive influence on business and culture that not adding it to the equation would have been like trying to paint a picture with half your colors missing.
This is where we are with AI; on the cusp of significant change. As Vernor Vinge says in the quote above, “we are on the edge of change comparable to the rise of human life on Earth”. It’s quite a statement. Similarly, AI scientist, Ray Kurzweil, has suggested that this upcoming period of change will be so dramatic that people living in the year 2024, will be as blown away by the year 2030 and beyond as people living in the 1900s would be blown away by today. In other words, there is the possibility of an almost unrecognizable future.
AI in FinTech — Inaction is a Considerable Risk
Thankfully, when it comes to AI in FinTech, we don’t need to get bogged down with what is coming in 2030 and beyond. All that’s important for us to know is that AI is here and it’s here to stay. If your company is going to survive, AI needs to be at the forefront of your mind. And the rate of adoption in FinTech is already gathering pace.
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- The Global AI in Fintech Market was valued at $8.23 billion in 2021, and is projected to reach $61.30 billion by 2031, growing at a CAGR of 22.5% from 2022 to 2031. Source.
- In 2023, the financial services industry invested an estimated 35 billion U.S. dollars in AI, with banking leading the charge, accounting for approximately 21 billion U.S. dollars. Source.
- 43% of financial professionals are already leveraging generative AI for various applications, such as personalized banking experiences and extensive data analysis for investment insights
- “The adoption of artificial intelligence by finance functions has increased significantly in the past year, with 58% using the technology in 2024—a rise of 21% from 2023” —according to a survey by Gartner, Inc.
- “Additionally, by 2026, 90% of finance functions are expected to deploy at least one AI-enabled technology solution” —according to the same survey by Gartner, Inc.
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In the UK in July, Lloyd’s Bank released its annual ‘Financial Institutions Sentiment Survey 2024’, where it gathers insight from over 100 senior decision-makers at banks, insurers, financial sponsors, and asset and wealth managers to get a feel for the mood of the industry. The insights it shared in relation to AI were fascinating.
“Artificial Intelligence (AI) has swiftly evolved from a theoretical idea to a critical business asset, driven by the surge in interest around generative tools like ChatGPT over the past two years. Financial institutions have recognised the significant potential of AI, transitioning from passive monitoring to active investment, fundamentally transforming their strategic approaches.”
What was most notable about the report is how companies have moved from monitoring AI developments to actively investing in AI. This is a dramatic shift as companies realized that by monitoring developments, they ran the risk of falling behind more proactive competitors.
“Two-thirds (63%) of financial institutions are investing in AI, a dramatic increase from 32% in 2023. This shift underscores a growing recognition of AI’s potential to drive competitive advantage and productivity. The majority, 81%, now view AI as a business opportunity, up from 56% last year.”
With significant change on the horizon and AI adoption within the financial sector already picking up pace, inaction is rightly viewed as a considerable risk.
Embracing AI in FinTech by Starting Small
We know that significant change is on the horizon and that companies are already starting to adapt. We know that there are risks involved in not taking action. But what is the correct course of action? If you work with a FinTech, a financial institution or a company that uses financial software, what should you do?
With AI, there’s a tendency toward making drastic changes, overhauling all systems and processes. However, our advice is to embrace AI by starting small.
A great example of this comes with ANZ Bank who recently piloted GitHub Copilot, an AI assistant to software engineers, to see how it impacted software engineering. After partaking in a six-week trial with 1,000 engineers, the pilot showed a 42% improvement in productivity as well as an increase in code quality. This trial allowed ANZ Bank to test the water before making the full commitment.
We ran a similar experiment, or use-case identification engagement, with an international FinTech company. The objective of this 4-week sprint was to assess if GitHub Copilot could improve refactoring efficiency, enhance code quality and enhance developer experience. You can read more about this engagement here.
Change is upon us. The time is now to act. But do so in a strategic, measured way. Test the waters first and see how specific AI technologies can enhance your business before making wholesale changes. This is the best, most pragmatic approach which significantly reduces risk and makes the transition to AI a whole lot easier.
Start today by checking out our range of AI Software Development Services.
