Shining a Light on the Banks at the Forefront of AI
11:19 18 Jan 2024 As we enter an exciting new year, businesses worldwide are ratcheting up artificial intelligence (AI) investment. Those that race ahead will challenge their rivals on growth, productivity, and financial performance – and those that fall behind risk irrelevance in a rapidly changing marketplace.
Given the breakneck pace of adoption, it’s critical that we’re able to track AI maturity across the banking sector, helping institutions to harness the power of emerging technologies with openness and transparency, and sharing best practices so that all banks can remain competitive in the AI age.
Our latest assesses the AI maturity of 50 of the world’s largest banks to determine how each is performing against four key capability areas – Talent, Innovation, Leadership, and Transparency.
It reveals an AI landscape dominated by North American banks, with three institutions in particular – JPMorgan Chase, Capital One, and Royal Bank of Canada (RBC) – breaking away from the rest of the pack.
For these market leaders, the path is already set, internal doubts have been quashed, and a clear strategic vision agreed upon. They know they must become AI-first banks, and they are well on the way towards achieving this goal. In 2024, expect them to double down on their transformation and take full advantage of their dominant positioning, swelling talent pools and overall AI prowess.
In addition to the three North American leaders, Wells Fargo, Goldman Sachs, and Citigroup all make it into the top 10, alongside APAC leaders CommBank and DBS, and European institutions UBS and ING. The European banks are generally lagging behind their North American peers. While we see some Western Europeans in the top 10, most rank towards the middle of the Index or lower. No UK banks make it into the top 10; Santander leads the Southern Europeans in 21st; and the Nordic banks rank in the 40s.
That said, the US market is heavily bifurcated. While eight of the 15 US banks we cover rank in the top 20, seven rank 30th or lower. In an increasingly competitive market, the lagging (typically smaller, regional) US banks have work ahead of them; this is true worldwide.
The banks positioned lower in the rankings know they need to close the gap, which means we should expect to see more activity, more investments, more output, and more strategic announcements – all of which translates to a more competitive ranking where the collective definition of AI maturity continues to advance and evolve.
The Pillars of AI Competency
JPMorgan Chase continues to radically outperform the wider market in terms of AI research – helping to preserve its position as the banking leader for Innovation – followed in second place by Capital One and RBC in third. Both Capital One and RBC have shown consistently strong performance across areas such as AI patents, research, and partnerships over the course of 2023.
JPMorgan Chase is the top-positioned bank for Transparency, thanks to its wide-ranging efforts to uphold and reinforce responsible AI practices across the bank. RBC maintains its impressive performance in Transparency, ranking second, while it is joined in third place by compatriot Scotiabank. Notably, half of the top 10 list for Transparency is dominated by new entrants, underscoring the lower barriers to entry – and widespread underinvestment – with regards to Responsible AI.
Unlike the previous Index iteration, however, JPMorgan Chase is not the top performer across every category. The race for AI talent is hotting up, and across the banks we have seen a 10% increase in volume of AI talent from May to September 2023, against a 2.5% reduction in overall headcount.
JPMorgan Chase has been supplanted as the Talent leader by new entrant Capital One, which demonstrates strength in depth in key areas, including AI development and data engineering talent. UBS makes third place, showing strength across all areas of the talent capabilities required to scale AI. UBS is now the European leader for Talent, post-Credit Suisse acquisition, and the only European bank to occupy a top three position across any of the four pillars of AI capability.
JPMorgan Chase also loses out on the top spot in Leadership to new entrant DBS, which dominates both in terms of the bank’s external AI narrative and the AI focus of its executive team. CommBank ranks third globally for Leadership, thanks in part to its CEO’s consistent reinforcement of AI as a key pillar of the bank’s strategy, and his willingness to discuss this in external media channels.
In Pursuit of the Best AI Outcomes
Encouragingly, half of the banks included in the place in the top 10 for at least one pillar of AI maturity. Moreover, nine of these are smaller banks that are new entrants to the Index – from Rabobank’s impressive showing in Talent to Bank of Montreal’s strong work around Innovation.
This diverse array of best-practice holders reinforces the idea that there are many pathways to the banking sector’s common destination. Ultimately, if a bank aspires to be “best-in-class” across all the facets of AI maturity, it needs to start benchmarking ongoing efforts across the entire industry.
Our goal through the Index, alongside our other benchmarking and intelligence work, is to help banking leaders make more informed AI-related decisions, investments, and strategic choices, so that the pursuit of AI ultimately leads to better outcomes for their organisations, their customers, and society at large.
Authored by Alexandra Mousavizadeh, CEO at Evident Insights
Take a look at what our industry experts discussed during our November Campfire:
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