Skip to main content

Enhance your competitiveness

How Artificial Intelligence (AI) is changing the game for banking and capital investments

 

You’re probably familiar with AI, but did you know it could be your single biggest competitive advantage?

While AI has been around a while in the banking and capital markets (B&CM) sector, primarily in functions such as algorithmic trading and trade surveillance, it’s increasingly recognised as the most significant controllable opportunity for enhancing competitiveness.

AI enables banks to address scalability challenges without substantial increases in head count. Where you once needed a hundred additional trained staff to improve a specific function, AI now offers transformative capabilities at a fraction of the cost. This means banks can gain extensive operational capacity with minimal additional expense compared to traditional hiring practices.

AI is poised to usher in a paradigm shift in B&CM, creating new leaders; industry innovators are already moving beyond using AI to accelerate current business plans (instrument of strategy) to strategically shaping future business models around new AI capabilities (determinant of strategy).

This report highlights AI's impact and role within B&CM and provides critical considerations for its safe and effective implementation. It also discusses the advantages and constraints of AI, while forecasting its ongoing evolution.

In New Zealand's dynamic market landscape, embracing AI presents a significant opportunity to stay ahead of the competition in a rapidly evolving global economy.

Key insights for New Zealand:

  • AI is expected to augment rather than replace humans in the workforce, significantly enhancing processing capacity and quality. This shift will elevate human roles to emphasise design, oversight, exceptions management and customer-facing interactions requiring emotional intelligence.
  • AI's significance to the sector could yield a 5-7% economic boost in the next 2-3 years and a 10-15% increase over 5-7 years. Successful innovators may achieve a 5-15% improvement in cost-income ratio within these periods.
  • The competitive landscape is expected to transform, where success in the sector will depend on how quickly and effectively an organisation’s AI initiatives drive the evolution of their business operations, products and services.
  • Banks implementing AI and GenAI to augment existing processes may not fully realise their value and could even see increased costs. While those leveraging AI for continuous transformation can build on foundational investments in cloud and data to unlock additional value.
  • GenAI is predicted to be the start of a new era for AI and it is already being used for work. The technology will continue to evolve with focus on multi-modal communication and intelligence built into human interactions.

Did you find this useful?

Thanks for your feedback

If you would like to help improve Deloitte.com further, please complete a 3-minute survey