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Changing the game: the impact of artificial intelligence on the banking and capital markets sector

Artificial intelligence will likely determine the banking and capital markets sector’s winners and losers in the coming five years.

Artificial Intelligence (AI) is not new to the banking and capital markets (B&CM) sector. It has been in production for years in specific functions, including algorithmic trading and trade surveillance and it is fair to assume that AI will be the single biggest controllable opportunity for players to improve their competitiveness.

AI now allows banks to tackle challenges of scale in a way banks have not been able to achieve without adding staff. If a particular function in a bank could be done better or faster by adding one hundred extra trained staff, it’s likely that AI can be transformative for that function. AI offers vast additional operational capacity, at low marginal cost compared to hiring the equivalent processing capacity as staff.

But more than that, the game in which players are competing will likely change. AI is on the threshold of paradigm shift. Through the work we do with banks around the world we see leading innovators already making the step from AI as an ‘instrument of strategy’ (i.e., accelerating delivery of today’s business plan) to a ‘determinant of strategy’, where tomorrow’s business is planned around new AI capabilities.

This report highlights the impact and role of AI in banking and capital markets, while suggesting key considerations for safe and effective execution. It also talks about the benefits and limitations of AI and how it will continue to evolve in the coming future, bringing in a wave of new winners.

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