A recent report by Capgemini reveals that nearly 66% of financial services firms have used artificial intelligence (AI), planning to expand its use across the entire value chain within the next two years. The report underscores the crucial role of implementing cloud technology at scale to maximize the benefits of AI investments. Despite the increased adoption of AI, financial firms face limitations in realizing its impact due to low-scale adoption.
“One-in-two banks and insurers have not moved their core business applications to the cloud,” the report said.
In a notable shift, 91% of banks and insurance companies have initiated their cloud journey, a substantial rise from 2020, when only 37% had embarked on cloud transformations.
However, this high initiation rate and corresponding investment don’t translate into effective cloud adoption at scale. More than half of the surveyed firms (50%) have moved only a minimal part of their core business applications to the cloud.
To unlock the full potential of AI and Gen AI, it is crucial to prioritize a comprehensive cloud journey. According to a senior Capgemini executive, banks need to focus on cloud adoption for fintech growth.
Capgemini Industry Platform Leader for Banking – India Anuj Agarwal said, “Today, we see FinTechs specializing in numerous areas that leverage AI to add significant value to banks. Examples of such areas include automation, personalized customer experience, better mitigation of financial crime and risk management.”
India, with one of the highest AI skill penetration levels globally, is witnessing substantial investments and demand for AI solutions. The government’s push towards a digital India further contributes to significant data availability, supporting India’s fintech revolution.
Agarwal said, elaborating on the inaugural Capgemini Research Institute’s World Cloud Report on financial services, “Through our research, we found that banks are generally struggling to offer clients the desired value and personalization that they seek. Hence, they must offer the right Customer Experience and improve their operational efficiency to plug this expectation gap.”
In wealth management, 60% see benefits in using cloud-enabled fraud detection techniques for data-driven risk management decisions. Additionally, 39% of retail banking executives highlight the transition of complex credit risk management to the cloud, aiming to expedite loan processing decisions through cloud-enabled automated processes and integrated analytics.
The report suggests that cloud-based scalable platforms will play a pivotal role in facilitating this transformative journey.
The report is based on global data from two primary research surveys and 30 interviews with financial service executives across 20 countries, encompassing 14 markets worldwide. These markets include the United States, Canada, the UK, France, Germany, Spain, the Netherlands, the United Arab Emirates, Singapore, Hong Kong, Japan, China, India, and Australia.