AI and Automation in Banking Market

AI and Automation in Banking Market Outlook (2024 to 2034)

As revealed in the latest study compiled by experienced analysts at Fact.MR, revenue from global AI and automation in banking market is calculated to increase swiftly from US$ 33.01 billion in 2024 to US$ 229.55 billion by the end of 2034, at a high-value 21.4% CAGR. Increasing investments by banks in AI and growing consumer preference for personalized financial services are key factors driving market growth.

Leading financial institutions are making aggressive investments in AI technology to augment automated investment advisors. The aim is to bring expertise in identifying red flags such as money laundering, which are monitored by the application of such advanced techniques, thereby driving AI and automation in banking market growth in the assessment timeframe. Also, with rising complications and competition in the banking sector, demand for industry-specific solutions is increasing to cater to the accumulating needs. Therefore, to meet the growing requirements of consumers, various banks and FinTech corporations are adopting AI solutions on a large scale. Increasing funding by prominent industry players is contributing to global AI and automation in banking market growth.

• For instance, in March 2022, Saphyre, a well-known FinTech organization, announced the accomplishment of its Series A round of US$ 18.7 million, led by HCAP Partners, with J.P. Morgan and BNP Paribas participating in the round.

Key Market Growth Drivers

• Automation helps lower operating expenses and minimize human error in repetitive and routine processes, including data entry, compliance checks, and transaction processing. This helps increase productivity and frees up banking employees to work on more strategic and value-added tasks.
• Artificial intelligence (AI) technologies have become essential in spotting and stopping fraud.
• Real-time anomaly detection and transaction pattern analysis using machine learning algorithms are helping banks better manage risk and react swiftly to possible attacks.
• Key AI and automation trends in banking market trend is artificial intelligence-powered chatbots and virtual assistants that offer 24x7 assistance and individualized customer care, greatly enhancing the consumer experience.
• By automating compliance monitoring, reporting, and documentation procedures, artificial intelligence (AI) and automation are assisting banks in maintaining compliance by lowering the risk of non-compliance and the fines that come with it.
• AI is lowering the need for manual labor by automating various banking operations, which results in substantial cost savings.
• Large volumes of data are being accurately and swiftly analyzed by AI systems, giving decision-makers insightful information.
• Banks are using AI and automation to improve business processes, create new goods and services, and gain a deeper understanding of consumer behavior and industry trends.

Report Attribute	Detail
AI and Automation in Banking Market Size (2024E)	US$ 33.01 Billion
Forecasted Market Value (2034F)	US$ 229.55 Billion
Global Market Growth Rate (2024 to 2034)	21.4% CAGR
North America Market Share (2024E)	33%
East Asia Market Value (2024E)	US$ 7.76 Billion
Solutions Segment Value (2034F)	US$ 133.14 Billion
Deep Learning & Machine Learning Segment Value (2034F)	US$ 84.93 Billion
Key Companies Profiled	Capital One; FAIR ISAAC; Microsoft Corporation; JPMorgan Chase & Co.; SAP SE; NVIDIA Corporation; Oracle Corporation; Amazon Web Services, Inc.; Cisco Systems, Inc.; Goldman Sachs; Intel Corporation.

Why as AI and Automation Become an Integral Part of Banking Operations?

“Rapidly Increasing Adoption of Chatbots in Banking Sector”

Banks are offering budget management apps powered by AI technology, which helps customers obtain their financial targets and augment their money management process. Also, robo-advisors are gaining significant traction in personalized financial services as they primarily target investors with limited resources such as SMEs and individuals.

In addition, AI-based robo-advisors implement conventional data processing techniques to offer their consumers financial portfolios and solutions such as investments, trading, and retirement plans. Moreover, with a rise in usage-based loans, advanced techniques are assisting in calculating the interests suitable for different individuals, which is another key factor driving AI and automation in banking market size expansion.

What are the Fears Restraining Utilization of AI and Automation in Banking Services?

“Huge Concerns about Data Privacy and Security”

When implementing AI and automation technologies, banks need to prioritize data privacy and security due to their handling of sensitive client data. Because new points of vulnerability are being created by the integration of these advanced technologies, there is an increasing danger of data breaches and assaults. Although difficult, ensuring strong data protection methods such as encryption, secure access controls, and ongoing monitoring is essential.

The banking industry's adoption of AI and automation is slower than expected due to the fear of possible data breaches and strict legal requirements for data protection. This is because banks have to strike a balance between innovation and upholding the highest standards of security and compliance.

Country-wise Insights

North America is poised to hold 33% of the global AI and automation in banking market share in 2024. Rapid development of the regional market is attributed to its early adoption of modern technologies. Presence of established players’ networks in the region is playing an important role in augmenting industry growth. In the East Asia region, utilization of AI and automation in banking is forecast to increase at a noteworthy CAGR of 22.6% throughout the projection period (2024 to 2034).

Why is Application of AI and Automation Banking High in the United States?

“High Focus on Minimizing Errors and Faster Operations”

Attribute	United States
Market Value (2024E)	US$ 4.85 Billion
Growth Rate (2024 to 2034)	21.1% CAGR
Projected Value (2034F)	US$ 32.97 Billion

The well-established banking sector in the United States has been an early adopter of AI and automation. Automation greatly lowers operating costs and minimizes errors for banks by handling regular operations such as data entry, compliance checks, and transaction processing. Banks enjoy increased efficiency and accuracy by optimizing these repetitive procedures. This frees up resources for reallocation toward more strategic and value-added initiatives. In addition to increasing overall efficiency, this operational revolution has increased the demand for AI and automation technologies as banks realize the significant advantages of using these advanced systems.

Why is Japan a Profitable Market in this Business Space?

“Reputation of Fast Adopter of Advanced Technology”

Attribute	Japan
Market Value (2024E)	US$ 2.24 Billion
Growth Rate (2024 to 2034)	22.8% CAGR
Projected Value (2034F)	US$ 17.55 Billion

Japan is implementing advanced technology such as AI and automation in banking at a high pace. The country is well-known for its technological strength and high deployment of advanced technology. The adoption of AI and automation for banking and financial purposes is high in Japan, as they provide various benefits such as enhanced data analytics for better decision-making, advanced fraud detection mechanisms to improve security, superior customer service through AI-driven chatbots, and virtual assistance, among others.

Category-wise Insights

Based on application, the market is segmented into customer service, back office, financial advisory, compliance & security, and risk management. Utilization of AI and automation in banking for customer service is rising at a high pace to improve customer satisfaction and the user experience.

Which Component Holds a Significant Market Share?

“AI and Automation Solutions Becoming Key for Customer Handling and Experience”

Attribute	Solutions
Segment Value (2024E)	US$ 18.49 Billion
Growth Rate (2024 to 2034)	21.8% CAGR
Projected Value (2034F)	US$ 133.14 Billion

In an increasingly digitized and competitive market, banks and financial institutes are looking to improve their client experiences, cut costs, and improve efficiency. Large volumes of data are processed at a fast pace by AI and automation, which improves risk assessment, fraud detection, and personalized services. Through chatbots and virtual assistants, these technologies also enable banks to provide 24x7 customer service, minimize human error, and expedite operations.

AI-powered solutions are more successful at handling cybersecurity and regulatory compliance issues. Automation and artificial intelligence (AI) enable banks to meet client expectations for faster, more convenient services while maintaining their competitiveness in a market that is changing quickly.

Why is Use of Deep & Machine Learning Surging in the Banking Sector?

“Ability to Precisely and Quickly Interpret Large Financial Data”

Attribute	Deep Learning & Machine Learning
Segment Value (2024E)	US$ 12.21 Billion
Growth Rate (2024 to 2034)	21.4% CAGR
Projected Value (2034F)	US$ 84.93 Billion

Capacity of deep and machine learning to quickly and precisely interpret large volumes of complicated financial data makes them popular choice in the banking industry. When it comes to jobs such as fraud detection, risk assessment, or customized customer service, these technologies are exceptionally good at recognizing patterns, spotting abnormalities, and predicting future events. Banks are automating a lot of repetitive tasks, improving decision-making, and obtaining insightful data from consumer behavior and industry trends by utilizing deep learning algorithms.

Better risk management, lower expenses, improved efficiency in operations, and better customer experiences result from this. Machine learning models are especially useful in dynamic and data-rich banking companies because they are able to continuously adjust and enhance their performance over time.

Competitive Landscape

To take advantage of advanced AI and automation capabilities, more banks and financial institutions are establishing strategic collaborations with IT firms and fintech startups. Through these partnerships, banks are quickly and efficiently integrating these technologies, thereby speeding up their digital transformation initiatives.

Key players in the AI and automation in banking industry are providing advanced solutions such as AI-driven customer care, sophisticated fraud detection, and customized financial products by collaborating with IT and fintech companies.

• In May 2024, the first-ever globally, AI-powered hyper-personalization platform for banks, called Lumyn, was launched by NewGen.
• In April 2024, Tenjin 4.0, a next-gen test automation platform with advanced AI capabilities for enterprise banking and financial services apps, was released by Yethi Consulting.
• In April 2024, Salesforce declared that it introduced new tools to assist banks in resolving disagreements over transactions. The new AI-powered tools expedite the entire dispute process to better address customer requests and inquiries.
• In March 2024, Talkdesk introduced its new Autopilot, a virtual agent tailored to the banking and retail sectors. The latest version makes use of prebuilt processes, generative AI, and discussions designed with the retail and financial services industries in mind.
• In December 2023, leading participants in the Indian banking industry, including HDFC Bank, Axis Bank, and AU Small Finance Bank, chose to use the cloud-based platform of the United States analytics business FICO. This has allowed these banks to streamline loan automation processes and accommodate easier customer onboarding.
• In September 2023, to automatically classify clients' financial activities, Temenos introduced an industry-first safe solution for banks utilizing generative artificial intelligence (AI).

Fact.MR provides detailed information about the price points of key providers of AI and automation in banking positioned across the world, sales growth, production capacity, and speculative technological expansion, in this recently updated market report.

Segmentation of AI and Automation in Banking Market Research

• By Component :

  • Services
  • Solutions

• By Technology :

  • Deep Learning & Machine Learning
  • Natural Language Processing
  • Computer Vision

• By Application :

  • Customer Service
  • Back Office
  • Financial Advisory
  • Compliance & Security
  • Risk Management

• By Solution :

  • Customer Service Analytics
  • Data Analytics & Visualization
  • Fraud Detection
  • Customer Relationship Management

• By Region :

  • North America
  • Western Europe
  • Eastern Europe
  • Latin America
  • East Asia
  • South Asia & Pacific
  • Middle East & Africa