Amid the recent clamour that 2024 will see AI implemented in financial services en masse, Moody’s says that while swift progress in implementation is likely this year, businesses, including financial organisations should be wary of the risks of rolling out too rapidly.
What’s more, the credit ratings firm notes that despite the significant implementation of AI, businesses and consumers should not expect to see it significantly impact credit quality over the next 12 months.
Global AI trends in finserv for 2024
Of course, the proliferation of AI in finserv can only be achieved if its implementation is first adequately funded. Moody’s expects funding in AI to grow this year, as capital is pumped into model improvement and edge computing to speed up AI adoption.
This may be slowed, however, by a continued global shortage of graphic processing units (GPUs) – essential components for AI computing. Supply should, according to Moody’s, improve as the year goes on.
Notwithstanding supply chain issues, Moody’s expects proprietary and open-source AI models to continue advancing, increasing their parameters, training data, input size and accuracy.
AI leading to finance, insurance transformation
Notably, the growth in AI applications will have the most profound benefits for the banking, financial services and insurance sectors, according to Moody’s.
This is because the immediate impact of AI will be first felt at software and semiconductor firms, particularly over the next two years. For Moody’s, financial services will, therefore, be a key sector leading the charge for AI adoption across industries, with AI expected to be ubiquitously adopted market-wide by 2026.
AI adoption: Beware of the risks & competition
However, despite the positives of AI adoption, businesses must be aware of the risks. Should businesses roll out AI too quickly without following adequate due diligence, this could lead to a detrimental impact on performance – something Moody’s expects to see examples of in the coming years.
Media firms may face the risk of growing competition, as new market entrants best implementing AI tech provide improved services over legacy players. This could impact financial services firms – as well as businesses in an array of industries – and the way they market their products and services.
Of course, underpinning this is the anticipated new set of regulations around AI use and best practices. While regulators work out how and where regulations will be imposed, businesses must ensure they remain nimble enough in their plans for onboarding AI to remain fully compliant.
The EU is set to pass its AI Act in H12024, and finserv companies must be prepared for the implications this may have on their AI rollout plans.