In the big banks’ Q2 earning calls this year, a critical milestone was reached. For the first time, half of the 50 major banks we track in the Evident AI Index fielded questions from equity analysts concerning risks and opportunities specific to artificial intelligence (AI).
External scrutiny of the banks’ AI progress is steadily increasing. This is in line with the huge sums institutions have pumped into originating, developing, rolling out and scaling AI use cases. Banking leaders we’ve spoken to aren’t expecting to register meaningful bottom line business impacts from AI investments for at least another 24-36 months. Meanwhile, investors need satisfying that progress is being made, and that ROI will be forthcoming,
Against this backdrop, the way in which banks communicate around AI is becoming increasingly important.
Just 12 months ago, many banks were making only sporadic, broad-brush or conceptual references to AI. However, our recent AI Leadership Report revealed every bank in the Evident AI Index now has a communications and marketing strategy. Furthermore, the majority are referencing AI across multiple communications channels. These include annual reports, press releases, company LinkedIn posts, and media interviews.
Banks need to ‘talk the walk’
It’s not just the volume of comms, but the substance that is increasing. More banks are now willing to reveal specifics around internal use cases already in production. Moreover, they are sharing the results of these efforts and tangible information about what they are doing to scale artificial intelligence.
Last year, only 6 of 50 Index banks identified AI as a strategic priority in investor relations materials, and clearly described specific use cases in production alongside their ROI. This year, this number increased 2.5x to 15 banks.
These substantive communications help to reassure and placate investors. Furthermore, if a bank is perceived to be at the leading edge of AI adoption, the easier it becomes to attract, retain and inspire the talent needed to make organisation-wide transformation a reality
The C-Suite needs to engage in the AI debate
To achieve cut through in the debate, banks are mobilising their C-level leaders to publicise their ongoing efforts. They are setting out their vision for becoming AI-first organisations.
Of the 50 banks, 45 now have at least one C-Suite executive that has engaged on the topic of AI in external media in the last year. Furthermore, 15 of the 50 banks have two spokespeople on AI, while six banks (CaixaBank, DBS, Goldman Sachs, Intesa Sanpaolo, JPMorgan Chase, and NatWest) are engaging with four or more spokespeople across the Executive team.
As the primary owner of the bank’s strategic vision, the CEO should arguably lead from the front when it comes to market communications around AI. Meanwhile, JPMorgan Chase leads the pack across a host of AI maturity metrics. The efforts of Jamie Dimon to set the agenda and relentlessly beat the drum should not be understated.
Over the past 12 months, Dimon has been quoted in the media on AI topics around 10x more than any other banking chief. He continuously reaffirming his institution’s dominant position in the eyes of investors. This is an intentional, coordinated AI communications strategy that other banks would be well advised to follow.
Communicating tangible AI gains is vital as operational realities bite
Every potentially game-changing new technology follows a well-established hype cycle. In the case of AI, we’re now seeing the inflated expectations of Generative AI – arguably the most significant technology innovation of the past decade – being tempered by the realities (and difficulties) of operationalisation.
A recent memo from leading venture capital firm Sequoia Capital highlighted the elephant in the room. Namely, that the gap between what’s being spent to build out AI (mostly by tech companies) and the actual revenue realised by that investment has risen to $600 billion this year, up from $200 billion in September 2023. Investors are starting to probe for detail on when and where the ROI is coming from and, like Big Tech, the world’s leading banks will find it impossible to duck the difficult questions.
A delicate balance must be struck. Overpromising on AI today and underdelivering further down the line could prove disastrous. And yet, banking leaders know that in the highly contested race for artificial intelligence supremacy, failing to communicate their plans and progress also carries reputational risk.
Of the 50 banks we track, 38 announced at least one AI use case in the last year. Meanwhile, only 21 reported any outcomes associated with those use cases. And of those, only two – JPMorgan Chase and DBS – went so far as to specify their total actual realised $ return on AI spend last year.
With investor scrutiny only likely to intensify in the year ahead, individuals at the top of every bank must set forth a clear vision. They must establish frameworks for measuring the effectiveness of their AI efforts and the ROI being realised. And, crucially, provide consistent and clear communication every step of the way.
- Artificial Intelligence in FinTech
