Banks and Investment firms will spend $623 billion on technology products and services in 2022
Generative artificial intelligence (AI), autonomic systems and privacy-enhancing computation are three technology trends gaining traction in banking and investment services in 2022, according to Gartner. These trends will continue to grow over the next two to three years, contributing to the growth and transformation of financial services organisations.
“While growth is the top priority, managing risk, optimising costs, and increasing efficiency also requires new technology innovations. Generative AI enables bank CIOs to offer technology solutions to the business in pursuit of revenue growth, while autonomic systems and privacy-enhancing computation are long-term solutions that provide new options for business transformation in financial services,” said Moutusi Sau, VP Analyst, Gartner.
IT spending by banking and investment services firms is forecast to grow 6.1 per cent in 2022 to $623 billion worldwide. The largest spending category is IT services, which includes consulting and managed services and accounts for 42 per cent of total IT spending in the sector at $264 billion. The fastest-growing category is software, with spending forecast to increase by 11.5 per cent to $149 billion. The three emerging technologies identified by Gartner collectively contribute to goals to run, grow and transform a business and have demonstrated use cases in the banking and investment industry.
Gartner predicts that 20 per cent of all test data for consumer-facing use cases will be synthetically generated by 2025. Generative AI learns a digital representation of artefacts from data and generates innovative new creations that are similar to the original but do not repeat it.
In banking and investment services, the application of generative adversarial networks (GANs) and natural language generation (NLG) can be found in most scenarios for fraud detection, trading prediction, synthetic data generation and risk factor modelling. It has potential because of the ability to take personalisation to new heights.
Currently, autonomic systems are mostly software-based in the banking context. However, humanoid robots are emerging in smart branches, examples of hardware-based autonomous systems that cater to clients and customers. They could be applied in autonomous debt management, personal finance assistants and automated lending. Robo-advisors are essentially low-level autonomic systems, although there are still trust concerns due to their high level of automation.
Gartner predicts that by 2024, 20 per cent of organisations that sell autonomic systems or devices will require customers to waive indemnity provisions related to their products’ learned behaviour.
Gartner predicts that 60 per cent of large organisations will use one or more privacy-enhancing computations, analytics, business intelligence or cloud computing by 2025.
With services, data has an inherent role in any analytics, computing and data monetisation efforts. The adoption of PEC is on the rise in use cases like fraud analysis, intelligence operations, data sharing and anti-money-laundering.