Artificial Intelligence In Banking Market Size, Share & Trends Analysis Report By Component (Service, Solution), By Application (Risk Management, Customer Service), By Technology, By Enterprise Size, By Region, And Segment Forecasts, 2024 - 2030

Market Size & Trends

The global artificial intelligence in banking market size was estimated at USD 19.87 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 31.8% from 2024 to 2030. AI integration in banking has transformed the sector, strengthening a more customer-centric approach and enhancing technological relevance. These systems simplify operations, reducing costs through heightened productivity and utilizing data insights beyond human capabilities for decision-making. Moreover, intelligent algorithms rapidly detect fraudulent activities, significantly improving security measures within seconds. This transformative technology marks a crucial shift in banking services, prioritizing efficiency and security.

AI-driven chatbots can analyze customer data to offer personalized recommendations and services, enhancing the overall banking experience. For instance, in May 2023, Kasisto, a U.S.-based company that focuses on conversational artificial intelligence solutions for the finance industry, introduced KAI-GPT, a banking-specific large language model (LLM). KAI Answers, Kasisto's generative AI application utilizing LLM, offers rapid, accurate responses with a natural conversational feel, benefiting frontline bank staff in delivering timely and contextually appropriate solutions.

The increase in daily digital transactions, including bill payments, withdrawals, and online deposits, urges banks to strengthen their fraud detection methods. This growing need drives the adoption of artificial intelligence in banking. Artificial intelligence, along with machine learning, is important in identifying fraud, discovering weaknesses in banking systems, minimizing risks, and securing online financial activities. As reliance on digital finance grows and fraud becomes more complex, advanced AI solutions become crucial. This drives the rapid growth of Artificial Intelligence in Banking, ensuring enhanced security and risk management, which is essential for cultivating trust in digital transactions.

The massive volume of daily transactions in banking and finance overwhelms employees tasked with collecting and organizing such extensive data, leading to potential errors. AI solutions step in, streamlining data collection and analysis and significantly enhancing user experiences. Moreover, this data serves a dual purpose, helping in fraud detection and facilitating informed credit decisions. This efficiency and accuracy driven by AI propels the market forward by transforming data handling, improving user satisfaction, and promoting risk management practices within the banking sector.

Market Concentration & Characteristics

Artificial intelligence in banking is marked by continual innovation propelled by rapid technological advancements, including evolving machine learning algorithms, abundant big data, and enhanced computing capabilities. This innovation leads to the emergence of novel AI applications, disrupting traditional banking practices and promoting the creation of innovative financial services and solutions. For instance, in September 2023, Temenos, Switzerland-based Software Company introduced a pioneering secure solution for banks. This solution uses Generative Artificial Intelligence (AI) to categorize customers' banking transactions automatically. This categorization helps banks offer personalized insights to improve digital banking experiences.

In the Artificial Intelligence in banking industry, merger and acquisition strategies are crucial for companies to expand their technological capabilities and market reach. Through mergers, firms consolidate resources and expertise, gaining access to advanced AI technologies and a broader customer base. Acquisitions enable companies to acquire specialized AI solutions or innovative startups, accelerating their product development and enhancing their competitive edge in delivering advanced banking services. For instance, in November 2023, Zapata Computing, Inc., a U.S.-based quantum software company, and Sumitomo Mitsui Trust Bank, Limited, a Japan-based lending firm, announced the collaboration to model financial time series data. This collaboration involves using generative AI empowered by quantum science. The initiative will take place on Zapata AI's Orquestra platform, aimed at creating and implementing an Industrial Generative AI application.

There's a rising trend of heightened regulatory attention driven by concerns over potential AI drawbacks, including algorithmic bias, privacy breaches, and workforce changes. Consequently, governments globally are formulating regulatory frameworks to oversee AI development and usage in banking. These regulations can impact the Artificial Intelligence in Banking sector significantly, molding the course of AI technology evolution and its acceptance among financial entities.

Component Insights

The solution segment dominated the market with a revenue share of 56.4% in 2023. The solution segment in the AI banking market is experiencing growth due to increasing demand for sophisticated AI-driven tools in banking operations, such as fraud detection, customer service automation, and personalized financial recommendations. Moreover, advancements in AI technology offer more refined, specialized solutions that are customized to specific banking needs, enhancing efficiency and accuracy. Moreover, as banks seek to modernize, they are increasingly investing in AI-based solutions to simplify processes, improve decision-making, and deliver enhanced customer experiences. This growing adoption of AI solutions across various banking functions propels the expansion of the solution segment within the AI banking market.

The service segment is expected to expand at the fastest CAGR over a forecast period. Banks are increasingly recognizing the importance of expert guidance and support during the implementation and integration of AI solutions into their existing frameworks. As AI technology becomes more intricate and specialized, the need for customized consulting, training, and maintenance services has surged. Moreover, many financial institutions lack in-house expertise in AI technologies, creating a demand for external services to navigate complexities and optimize AI systems for specific banking requirements. This growing reliance on external services for comprehensive support throughout the AI adoption lifecycle propels the expansion of the service segment within the AI banking market.

Application Insights

Risk Management accounted for the largest market revenue share in 2023. The evolving nature of financial fraud and cybersecurity threats requires sophisticated risk management tools powered by AI, which can rapidly detect and respond to fraudulent activities. As banks diversify their offerings and engage in more intricate transactions, the potential risks associated with these activities amplify. AI-powered risk management tools provide comprehensive analysis and modeling capabilities, assisting banks in mitigating risks across a wide array of complex financial products and services. This sophistication in risk assessment and mitigation strategies offered by AI-driven solutions further drives the growth of the Risk Management segment to ensure robust protection against potential vulnerabilities in the financial sector.

Customer service segment accounted to register a significant CAGR over a forecast period. There's a growing emphasis on delivering personalized and efficient customer experiences in the banking sector. AI-powered solutions offer automated yet highly personalized customer service through chatbots, virtual assistants, and voice recognition systems customized to individual customer needs effectively. As customer expectations continue to evolve, there's a rising demand for round-the-clock support and quick query resolution, which AI-based customer service tools can efficiently provide. These solutions offer integration across various communication channels, ensuring a consistent and user-friendly experience ultimately driving the growth of the customer service segment within the market.

Technology Insights

Natural Language Processing (NLP) accounted for the largest market revenue share in 2023. The increasing reliance on digital channels for banking transactions has led to a surge in unstructured textual data, such as customer queries, reviews, and social media interactions. Natural language processing enables banks to extract valuable insights from this unstructured data, aiding in customer sentiment analysis, personalized service delivery, and a better understanding of customer needs and preferences. Moreover, NLP-powered chatbots and virtual assistants offer enhanced conversational capabilities, enabling more natural and effective interactions with customers, thereby improving customer satisfaction. NLP is important in automating various processes such as document analysis, compliance checks, and risk assessment, leading to increased operational efficiency and accuracy.

The computer vision segment accounted to register a significant CAGR over a forecast period. Computer Vision is being employed extensively for security purposes, utilizing facial recognition and video analytics to monitor and secure ATMs, branches, and online transactions, thus improving fraud detection and prevention measures. Moreover, Computer Vision streamlines document verification processes by extracting and analyzing information from IDs, checks, and forms, reducing manual errors and accelerating administrative tasks. Moreover, its integration into mobile banking apps facilitates experiences for customers, enabling functionalities such as remote check deposits through image recognition. Overall, the versatility of computer vision in strengthening security, automating processes, and enhancing user experiences contributes to its substantial growth within AI in the banking market.

Enterprise Size Insights

The large Enterprise segment accounted for the largest market revenue share in 2023. Large enterprises are experiencing growth in the AI banking market due to their capacity to invest in sophisticated AI technologies at scale. Their substantial resources enable them to adopt comprehensive AI solutions that satisfy diverse banking needs, spanning risk management, fraud detection, compliance, and customer service. Moreover, these enterprises often have complex operations and vast datasets, making AI an integral tool for data analysis, automation, and decision-making, ultimately enhancing operational efficiency and enabling them to offer advanced, personalized services to a broader customer base.

Small and Medium Enterprises (SMEs) segment accounted to register a significant CAGR over a forecast period. SMEs are witnessing growth in the AI banking market due to the increasing availability of cost-effective and scalable AI solutions customized to their specific needs. These solutions empower SMEs to utilize AI technology for targeted purposes, such as customer engagement and basic analytics. As AI tools become more accessible and user-friendly, SMEs find them invaluable for enhancing operational efficiency, enabling better decision-making, and improving customer interactions. Moreover, SMEs' agility enables them to rapidly adopt AI innovations, adapting them to their operations, and facilitating growth within the evolving banking sector.

Regional Insights

North America accounted for the highest share of the global revenue in 2023. North America boasts a strong technological foundation and extensive digitalization in its banking operations, creating a conducive environment for embracing AI technologies. In this region, banks have been pioneers in adopting AI solutions, utilizing them to elevate customer experiences, offer personalized services, and conduct advanced analytics. This early adoption is further propelled by the presence of prominent AI technology providers, hastening the integration and growth of AI within the banking sector in North America. Furthermore, the innovative initiatives and strategic partnerships between financial institutions and tech firms in North America significantly drive the rapid evolution and implementation of AI solutions.

Asia Pacific is anticipated to witness significant CAGR growth over the forecast period. The Asia-Pacific region is experiencing growth in AI in the banking sector due to its growing fintech sector, rapid digital transformation, and a large population with increasing access to digital banking services. Emerging economies within the Asia-Pacific, such as China and India, are witnessing substantial AI adoption in banking, driven by innovative fintech startups and proactive investments by established financial institutions. Furthermore, the growing smartphone penetration and the rising demand for convenient and efficient banking services among the region's diverse consumer base propel the adoption of AI technologies in banking across Asia-Pacific markets.

Key Companies & Market Share Insights

Some of the key players operating in the market include JPMorgan Chase & Co.; Goldman Sachs; Capital One; International Business Machines Corporation; and Amazon Web Services, Inc.

• JPMorgan Chase & Co. offers a diverse range of banking and financial services globally. Renowned for its innovative use of technology, JPMorgan Chase & Co. utilizes AI and data analytics for risk management, trading, and customer-focused applications. The company's extensive network, comprehensive offerings, and technological advancements position it as a key player shaping the modern banking sector.

• Goldman Sachs stands as a prominent global investment bank and financial services firm renowned for its expertise in investment banking, asset management, and securities operations. Recognized for its strong advisory services and strategic investments, Goldman Sachs also integrates advanced technology and AI in areas such as trading, risk management, and wealth management solutions. Utilizing its extensive market knowledge and innovative approaches, Goldman Sachs remains a key influencer in the financial industry's evolution.

NVIDIA Corporation and Cisco Systems, Inc., are some of the emerging market participants in the artificial intelligence in banking market.

• NVIDIA Corporation is a technology company known for its innovation in graphics processing units (GPUs) and artificial intelligence. In banking, NVIDIA's GPUs are utilized for advanced data analytics, deep learning algorithms, and computational tasks, enhancing risk assessment, fraud detection, and financial modeling. NVIDIA's AI-driven technologies are transforming banking operations by enabling faster and more accurate data analysis and decision-making processes.

• Cisco Systems, Inc. is a global technology conglomerate primarily recognized for its networking hardware, software, and services. In the realm of banking, Cisco Systems, Inc. provides AI-powered cybersecurity solutions customized for financial institutions. Utilizing AI and machine learning capabilities, Cisco Systems, Inc. addresses evolving cybersecurity threats, offering robust defense mechanisms to safeguard sensitive financial data and infrastructure. Their innovative AI-driven solutions aim to fortify the resilience of banking systems against sophisticated cyber risks, ensuring a secure and reliable banking environment.

Recent Developments

• In May 2023, Temenos, Switzerland-based Software Company partnered with Amazon Web Services, Inc. (AWS) to offer its core banking solutions via Software-as-a-Service (SaaS), integrating its application onto AWS. This collaboration expands Temenos Banking Cloud's reach globally, offering reliable and scalable banking services. Utilizing AWS, Temenos ensures high availability across regions and meets data sovereignty needs without costly redundant infrastructure onsite.

• In November 2023, Amazon Web Services, Inc. announced that the Bank of Ayudhya Public Company Limited (Krungsri) in Thailand is utilizing AWS to enhance customer experiences and strengthen financial inclusion. Through AWS, Krungsri is cultivating an innovative culture, facilitating collaboration among three group entities—Bank of Ayudhya, Ayudhya Capital Services, and Krungsri Auto—by utilizing data analytics, machine learning (ML), and artificial intelligence (AI).

• In September 2022, JPMorgan Chase & Co., a U.S.-based financial services firm, acquired Renovite Technologies, Inc., a cloud-native payments technology company. This acquisition enables JPMorgan Chase & Co. to develop an advanced merchant acquiring platform, reinforcing its payments modernization strategy and facilitating its transition to cloud-based solutions.

AI In Banking Market Report Scope

Global Artificial Intelligence In Banking Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global Artificial intelligence in banking market report based on component, application, technology, enterprise size, and region:

• Component Outlook (Revenue, USD Million, 2017 - 2030)

  • Service

  • Solution

• Application Outlook (Revenue, USD Million, 2017 - 2030)

  • Risk Management

  • Customer Service

  • Virtual Assistant

  • Financial Advisory

  • Others

• Technology Outlook (Revenue, USD Million, 2017 - 2030)

  • Natural Language Processing (NLP)

  • Machine Learning & Deep Learning

  • Computer vision

  • Others

• Enterprise Size Outlook (Revenue, USD Million, 2017 - 2030)

  • Large Enterprise

  • SMEs

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

    • France

  • Asia Pacific

    • China

    • Japan

    • India

    • South Korea

    • Australia

  • Latin America

    • Mexico

    • Brazil

  • Middle East and Africa

    • Kingdom of Saudi Arabia (KSA)

    • UAE

    • South Africa