In a bold move towards innovation and transparency, JPMorgan Chase has secured the top spot for the second consecutive year on Evident AI’s Index of banks embracing Artificial Intelligence (AI).
The report highlights the banking giant’s remarkable achievements in both research and patent activities, as well as its impressive strides in transparency. This achievement signifies JPMorgan’s commitment to staying at the forefront of the financial industry’s technological advancements.
Capital One and Royal Bank of Canada follow closely
Following JPMorgan’s lead, Capital One clinched the runner-up position on the AI innovation index. This achievement underscores Capital One’s dedication to pushing the boundaries of AI applications in banking. The Royal Bank of Canada secured the third spot, showcasing the North American banking sector’s strong representation in the top ranks.
An interesting trend emerging from the report is the dominance of North American banks in AI banking initiatives. Six of the top 10 banks rated for their AI endeavors are based in North America.
This dominance is not surprising given that U.S. and Canadian banks contributed significantly to AI research and investment in the financial sector last year. They were responsible for publishing 80% of the research on AI and funding 60% of AI investments in financial services.
AI’s potential worth to global banks
These banking giants’ strategic investment in AI could potentially be a game-changer. According to a 2020 McKinsey report, AI technologies have the potential to generate up to $1 trillion in value for global banks. This transformation would involve improving and automating tasks such as high-frequency trading, marketing, and fraud detection.
The McKinsey report emphasizes the urgency for traditional banks to become “AI first” in their vision and execution. Integrating AI capabilities can enhance customer engagement significantly by offering intelligent, highly personalized solutions through seamless and intuitive interfaces.
JPMorgan has been particularly aggressive in capitalizing on its interest in AI. Earlier this year, the bank advertised over 3,600 AI-related job openings, nearly twice as many as its closest competitor, Citigroup, with 2,100 listings. Deutsche Bank and BNP Paribas also joined the AI race, each posting over 1,000 AI positions.
One notable project in JPMorgan’s AI portfolio is a ChatGPT-like service, referred to as IndexGPT. This service assists customers in selecting potential investments by harnessing “cloud computing software using artificial intelligence” for analyzing and tailoring securities to customer needs. To secure the IndexGPT trademark, JPMorgan aims to launch this innovative service within the next three years.
Goldman Sachs and Morgan Stanley’s AI testing
While JPMorgan has been vocal about its AI initiatives, Goldman Sachs and Morgan Stanley have been quietly testing AI for internal use. However, these banking giants have yet to reveal how they plan to interface AI technology with their customers.
The increasing focus on AI adoption comes at a time when experts are predicting a wave of consolidation in the banking industry. Developing a robust AI system could enable larger financial institutions to achieve more with fewer resources.
Conversely, smaller banks and credit unions that traditionally rely on customer service as their differentiator may face challenges if they lag in AI development, especially if industry consolidation becomes a reality.
The U.S. banking landscape
Evident AI’s report sheds light on the U.S. banking landscape, revealing a clear divide. While eight out of the 15 U.S. banks covered in the report rank in the top 20 for AI adoption, seven banks rank 30th or lower.
The smaller, regional U.S. banks appear to have significant work ahead of them to catch up with their larger counterparts in the AI race.
Building a robust AI infrastructure isn’t without its challenges. Banks face stiff competition from tech firms, which are equally, if not more, eager to hire AI talent and often offer more lucrative packages.
Business Insider reports that, on average, for every employee hired by banks in the past two years, they have lost one, with a significant portion of departing employees leaving the finance industry altogether.