Hakkoda Publishes 2024 Report: AI's Impacts and Challenges

Hakkoda, a cloud data engineering consultancy specialising in Snowflake, has released its 2024 Financial Services and Insurance State of Data Report.

The survey consists of 500 director to CEO-level data leaders, where 145 of those polled are from large financial services and insurance organisations. The survey reveals the top challenges, priorities, and opportunities for the FSI industry through 2027. 

Artificial intelligence is poised to disrupt the financial services and insurance industry in a significant way in the next three years, where FSI organisations are more likely to be using GenAI for Documentation and Metadata Generation than organisations in other industries. The survey states that 97% of FSI organisations believe generative AI will be important to their success within that time frame. 

Some key report findings 

81% of FSI participants express confidence in their organisation's data team to develop necessary AI capabilities and confirm having the infrastructure for AI workloads. Similarly, 84% believe their teams possess the requisite AI skills for effective implementation. Only 26% of FSI entities have established actionable generative AI use cases; notably, just 30% of FSI organisations have updated their data stack.

Other Financial Services State of Data 2024 report findings:

• 70% of FSI organisations have yet to centralise their data on a primary cloud data platform
• 74% of FSI organisations intend to centralise in the cloud in 2024
• 38% of FSI organisations cite data monetisation as a major challenge
• 53% of FSI organisations are outsourcing their data management

Financial services executives disclose a 136% return on investment from their data initiatives and demonstrate superior data literacy compared to other sectors. However, their data infrastructure falls behind that of other data-centric industries. Reports indicate less scalability and efficiency in their data stacks, with a mere 8% of FSI leaders describing their data storage and pathways as "extremely efficient and scalable." They are "less likely to have centralised their data on a primary cloud platform than other industries; and are less likely to be using cloud data stores, warehouses, and data lakes in general".


• Financial services are "less modernised" - only 30% of financial services and insurance organisations have centralised their data on a cloud platform. The FSI sector is also less likely to use data lakes, with only 37% of FSI leaders reporting that their business had one in current use. Among Director to Senior Director level FSI data leaders, 58% saw building and maintaining advanced analytics capabilities as a major challenge for their operations in 2024.
• Room for growth in key generative AI applications - 51% of FSI leaders report that their company is using generative AI for documentation and metadata descriptions. Compared to other industries, they are less likely to be using generative AI tools for data governance and compliance (43%), data cleaning (43%), data cataloguing (41%), schema matching (38%) and AI copilots (31%).
• Financial services and data monetisation - Only 22% of FSI organisations are currently monetising their data, with 93% planning to monetise within the next two years. Data monetisation was reported as a major challenge by 38% of FSI leaders (trailing only Healthcare among industries surveyed). FSI organisations report low confidence in the efficiency and scalability of their data stacks, and 70% of FSI organisations had yet to centralise their data on a primary cloud platform in 2023.

Anand Pandya and the State of Data 2024

“The State of Data 2024 report shows that financial services organisations are eager to modernise their data stacks, implement generative AI, and tap into data monetisation,” said Anand Pandya, Global Head of Financial Services at Hakkoda.

“FSI data leaders know they need help from modern data experts who understand their industry to achieve their data goals. Capturing the opportunities presented by powerful new data-driven technologies requires rapid execution along a long-term roadmap to show that tomorrow's capabilities are ready today.”

“Financial services organisations understand the value of their data but have commoditised their technologies and systems to extract its value. This means every identified data transformation project has a business case associated with it and the data team gets buy-in from the start. As a result, it’s possible to deliver truly exceptional ROI from their projects. On the other hand, it also means that financial services organisations are deprioritising some of the most simple but essential modernisation projects because they’re more difficult to show ROI. That means that their short-term metrics and success rates look exceptional, but their long-term projections become increasingly unstable as they continue to accrue tech debt.”

A detailed executive summary and the Financial Services State of Data 2024 report are available here. The Financial Services State of Data report was drawn from a study conducted on behalf of Hakkoda by Lawless Research in December 2023 as a blind survey of 500 directors to CEO level data leaders from large organisations across major industries. 20% of respondents came from organisations with less than US$500m annual revenue; 29% with US$500m to US$999.9m annual revenue; 37% with US$1bn to US$9.9bn annual revenue; and 14% with US$10bn or more annual revenue.

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