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Over 80% of UK retail banks value AI as part of digital transformation

The vast majority of retail bank professionals in the UK realise the importance of AI as a tool in their digital transformation efforts

Over eight in 10 UK retail banks recognise the importance of artificial intelligence (AI) to their digital transformation projects, according to research.

Some 86% of UK respondents to the survey by consultancy GFT said they valued the role of AI, while Brazilian firms showed the most positive response at 96%.

The biggest benefit expected from AI was lower operational costs, according to 71% of respondents. Other advantages include improved customer engagement (64%) and reduction of risk (48%). The banking operations which would benefit most are the call centre (58%), back-office processing (57%) and personal financial planning (47%).

The banks identified virtual customer assistants, or chatbots – which understands natural language – as the most useful AI technology (61%). Automation of process (42%) and “next best action” (41%) were the next most valued uses. Next best action refers to a tool that analyses a particular customer’s need to decide which decision to make. 

Christian Ball, head of retail banking at GFT, said AI is a vital factor in digital projects.

“If we look at the UK retail banking market as a whole, the customer is very much at the centre of most digital transformation projects. Meeting their needs and expectations is paramount,” he said.

“Banks know they are sitting on a wealth of information, especially unstructured customer data, which is not being used to its full capacity. AI solutions such as chatbots, process automation and personalised interfaces, powered by open application programming interfaces (APIs), are critical to the success of digital transformation projects.”

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Most of the survey respondents (69%) have also considered banking as a platform (BaaP) as part of their digital transformation, which puts banking services into the cloud. The UK is one of the leaders in implementation, with 77% saying their banks have begun to incorporate BaaP. Germany had the highest take-up with 95% of respondents saying they had at least considered BaaP.

Respondents identified the biggest advantages of BaaP as greater customer engagement (62%), the ability to develop new applications (55%) and lower operational costs (51%). However, some of the main hurdles include the complexity of legacy technology (65%), security issues (56%) and cost (45%).  

“It’s encouraging to see so many UK banks embracing new ways of working and recognising the increasing importance of these new technologies, but there is still much work to be done,” said Ball.

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