What Industry Leaders Should Consider

Julien Villemonteix is the CEO of UpSlide, a software company that creates documents for investment banking and financial advisory firms.

When it comes to the future of banking, there’s a buzz around artificial intelligence, more specifically, generative AI. With Statista projecting the global market for AI will grow to $826 billion by 2030 and EY promising that “AI will redefine the financial services industry in two years,” banks are diving headfirst into this tech revolution. And it’s easy to see why.

The technology is already streamlining customer inquiries and deal sourcing, and not being part of the AI revolution can leave banks feeling as though they’re falling behind the curve. However, the rush to jump on the AI bandwagon has echoes of the heady days of the dotcom bubble—when excitement overshadowed sound judgment.

It’s my view that banking leaders should keep their cool and remain clear-eyed on AI. Yes, it has huge potential, but it’s not a panacea and comes with its limitations, too. For one, it’s very expensive and requires intensive implementation that costs money and time, as well as regulatory oversight. This threatens user experience and, ultimately, adoption and could leave a huge tech investment going largely unused. Secondly, despite the excitable language around AI, it’s a nascent technology and requires a lot of human corrections and feedback to be effective.

Then there are the security concerns. After all, the last thing you want when handling sensitive financial data is for your AI to start “hallucinating” or for sensitive data used to train an AI being inadvertently revealed during interactions with a customer. Significant legal questions also remain around feeding personal data to a large language model.

So, what should banking leaders consider when it comes to their tech investment priorities?

AI Vs. Automation

One critical distinction that often gets lost in the excitement is the difference between AI and automation. While automation attracts less hyperbole, it offers a proven strategy for enhancing efficiency. It doesn’t command the same headlines, but it’s capable of delivering benefits without the added risks associated with AI. For many banks, embracing automation might actually be the smarter choice—offering cost savings and security that AI can’t guarantee at this stage.

Furthermore, automation is generally easier to implement, and many vendors can work closely with banks to ensure that adoption is achieved. My company surveyed 600 professionals in the investment banking industry across the United Kingdom, Australia and the United States and found that around 70% of IT leaders in investment banking are squandering a quarter of their budgets on poorly utilized software. This underscores why good implementation is essential to ensuring returns on software investments.

Building Applications

To make the right tech investments, the financial services sector should think carefully about specific use cases rather than onboarding tech before being sure of how it’ll be used. Asking how your organization plans on applying tech is vital to avoid further exacerbating the problem of underutilized tech.

There are many tools out there that can automate everything from document management to brand compliance to building smarter internal processes. These are not AI but rather tools built to solve specific problems. It may well be that tackling particular problems with automation can unlock huge amounts of productivity without, if you’ll excuse the pun, breaking the bank. You can start by identifying gaps in bankers’ workflows.

Planning For The Year Ahead

While many articles in the coming months will paint AI as the magic bullet for banking in 2025, we must remember that sound investments require careful consideration and a focus on tangible returns. Ultimately, the question isn’t whether AI is the future of banking; it’s about understanding its role in conjunction with automation. As we look ahead, leaders must ask themselves which approach will yield the greatest value for their institutions in a rapidly evolving landscape.

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