02.05.2024Technology

‘Buy versus build’ and other considerations for banks adopting AI

In the past six months, it seems like the entire world has transitioned on the topic of AI from “should we invest” to “how should we invest”. Yet, in the banking industry, there are two competing, and somewhat contradictory narratives around this question:

Fourthline Forrester TEI thumbnailBy The Fourthline Team
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  • The bullish narrative says it’s time to put the foot on the accelerator. Established banks are not adding new clients in meaningful volumes, and operating costs are high. Generative AI could enhance productivity in the banking sector by up to 5% and reduce global expenditures by up to $300 billion, according to McKinsey. That’s an impressive figure, and is only taking into account GenAI, with the implication that the overall upside could be far bigger.

  • On the more cautious side, current strong profits, plus strict responsibilities to regulators and clients, mean that banks must be more cautious and deliberate about how they adopt AI. There is no urgent need to widely adopt AI tech in the short term; slow and steady is the way to go.

Nonetheless, AI has already reached a wider inflection point. Even with a responsible approach that takes into account regulations and security, it is now time to start considering how to leverage this technology. In this post we will examine some of the risks, and some of the ways to approach AI adoption prudently. We will also evaluate the pros and cons of building AI capabilities in-house versus partnering with an external provider.