AI in Banking: Benefits, Risks, What's Next
For CEOs, AI Innovation Is Now A Near-Term Survival Requirement
AI requires a shift in mindset for the C-Suite. Companies that fail to adopt AI technologies risk falling behind their competitors, losing market relevance, and even jeopardizing their long-term survival.
getty"AI is no longer a long-term innovation initiative—it's a near-term survival requirement." This is according to a recently published Harris Poll survey conducted on behalf of AI company Dataiku, which says 74% of CEOs overall, and 79% in the U.S., said they could lose their jobs within two years if they don't deliver measurable AI-driven business gains.
So, why is AI innovation a "near-term survival requirement?"
In a nutshell, AI requires a shift in mindset for the C-Suite. Companies that fail to adopt AI technologies risk falling behind their competitors, losing market relevance, and even jeopardizing their long-term survival—an ominous situation for any chief executive.
So, rather than considering the risks of implementing AI projects, CEOs should weigh the costs of inaction.
Loss of Competitive EdgeOne of the most immediate and significant risks of not adopting AI is the potential loss of a competitive edge. Companies that are leveraging AI to improve efficiency, enhance customer experiences, and innovate are gaining a distinct advantage over those that remain hesitant. For instance, AI-powered tools can optimize supply chains, automate routine tasks, and generate insights from big data, leading to faster decision-making, improved profitability, and the ability to innovate more quickly than competitors.
Failing to adopt AI means that competitors who are embracing the technology will likely outpace your organization, attracting more customers, increasing market share, and outperforming you in critical areas such as product development, personalization, and operational efficiency.
Slower InnovationAI isn't just about improving existing processes; it's about enabling new ways of thinking and unlocking new opportunities. The technology has the potential to improve customer service, speed product development, and more. Companies that delay adopting AI risk missing out on innovative solutions that could fundamentally transform or accelerate their businesses.
For example, AI can facilitate breakthroughs in product design by enabling rapid prototyping and simulations. It can also drive innovation in marketing by offering hyper-targeted campaigns Inefficiency and Increased Operational Costs
AI inaction can lead to inefficiency and rising operational costs. AI has the potential to automate many time-consuming and repetitive tasks, freeing up valuable human resources for more strategic work. Tasks such as data entry, report generation, customer service inquiries, and supply chain management can be optimized using AI, reducing the time and costs associated with manual labor.
Without AI, organizations may find themselves running inefficient processes, which could lead to higher operational costs and less effective resource allocation. Companies that resist AI may find their cost structures out of synch with the market, widening the competitive gap.
Customer Expectations and SatisfactionCustomers today have higher expectations than ever before. AI-powered tools can provide hyper-personalized experiences, faster response times, and enhanced customer support through chatbots and virtual assistants—not the binary phone trees of yesterday, but personalized, human-like agents that can accomplish tasks on your behalf.
Businesses that fail to implement AI risk disappointing customers with outdated systems, slow service, and generic experiences that no longer meet modern standards. This is happening today.
Companies that do not invest in AI may lose customer loyalty to competitors that offer more sophisticated, AI-driven experiences. Declines in customer satisfaction are a one-way street to reduced revenue and brand perception.
Data UnderutilizationData is one of the most valuable assets businesses possess, yet many organizations fail to capitalize on this asset. AI excels at extracting valuable insights from vast amounts of data, enabling businesses to make data-driven decisions that can improve performance and mitigate risks.
Companies that don't implement AI solutions risk leaving vast amounts of data untapped, missing out on opportunities to enhance decision-making, predict trends, and gain deeper insights into customer behavior.
Data-driven strategies Talent Attraction and Retention Challenges
As AI becomes more integrated into business operations, attracting and retaining top talent in fields like data science, machine learning, and AI engineering will become increasingly important. Organizations that fail to prioritize AI may struggle to attract highly skilled employees, as the best talent often seeks out companies that are on the cutting edge of technology.
On top of that, your existing employees may become frustrated with the lack of advancement AI can unlock. Talented workers want to work for companies that embrace innovation. Companies that avoid AI may find themselves with an outdated workforce and an inability to attract the next generation of top-tier talent.
Regulatory and Compliance RisksAI is rapidly becoming a competitive advantage in regulatory-heavy industries such as healthcare, finance, and retail. Businesses that fail to implement AI solutions may be missing an opportunity to streamline or automate compliance, especially when it comes to data protection, fraud detection, and risk management.
For example, AI can enhance cybersecurity, identify financial fraud, and detect irregularities in transactions or operations. Failing to adopt AI for compliance purposes can leave an organization vulnerable to breaches, non-compliance penalties, and reputational damage.
Increased Vulnerability to DisruptionIndustries across the globe are experiencing rapid disruption due to AI-powered companies challenging traditional business models. From fintech startups leveraging AI for financial services to retail giants using machine learning for inventory management and customer insights, businesses that fail to adapt to this new environment risk being left behind as more innovative competitors take the field.
By taking a more cautious AI stance, companies open themselves up to the risk of disruption from more nimble, tech-savvy competitors who are better able to respond to market changes and evolving customer expectations. Again, CEOs don't want to be on the wrong end of the innovation curve.
Reputational DamageFailing to adopt AI can damage an organization's reputation as a forward-thinking, innovative brand. Customers, employees, and investors expect companies to stay ahead of the competition by taking advantage of technological trends. Those that fail to do so may be seen as a tired, old brand from yesterday.
Younger consumers and employees are more likely to evaluate brands based on their adoption of newer technologies and ability to innovate. Aversion to AI and newer tech could signal a company that is not keeping up. No brand wants to be seen as tired.
The Cost of Inaction is Too HighThe risks associated with inaction are considerable, and the risks of survival are real. Whether it's customer experience, data-driven insights, regulatory compliance, or brand perception, AI provides measurable performance characteristics, and CEOs with losing formulas may not be CEOs very long.
But that also doesn't mean chiefs need to dive headfirst into the deep end. It's important to learn and adapt. Think about low-hanging fruit in your organization. Small projects that can be automated. How old is your call center solution, for example? Where are there opportunities to drive new revenue by understanding customer preferences and buying patterns?
By choosing bite-sized projects that yield real improvements, CEOs will not only learn but also take essential steps to improve their business metrics.
Apple's AI Approach: Innovation, Criticism, And The Road Ahead
Apple Intelligence, Apple's AI strategy, moves forward with app innovation despite criticism.
gettyAt WWDC in 2024, Apple rolled out its AI strategy and named it Apple Intelligence.
It was an optimistic vision that created many expectations. However, Apple has received a great deal of criticism over the last year since its original launch, as the perception is that it overpromised and underdelivered on its AI strategy.
Apple's AI strategy is criticized for its late entry, limited cloud capabilities, and overemphasis on on-device processing. Critics argue Apple has lagged behind leaders like OpenAI, Google, and Microsoft in foundational AI research and large language model (LLM) development. Instead of building a strong AI platform early, Apple focused on privacy and hardware, leaving it reliant on partnerships—like integrating ChatGPT into Siri.
Skeptics also point to Apple's insistence on running AI models mostly on-device. While this approach protects privacy and improves speed, it limits the scale and complexity of AI features compared to cloud-based systems. Some developers and analysts believe this restricts Apple's ability to deliver truly transformative AI experiences.
At this year's WWDC in early June, Apple acknowledged that many of the things promised in the 2024 Apple Intelligence launch are behind. Apple's Senior Vice President of Software Engineering, Craig Federighi, stated, "We're continuing our work to deliver the features that make Siri even more personal. This work needed more time to reach our high-quality bar, and we look forward to sharing more about it in the coming year."
Open AI, Google, Meta, Microsoft, and players have their own LLM engines. But Apple needed to partner with and use a third party to help deliver AI integration to their OS and apps. In this case, they partnered with Open AI and ChatGPT to add AI to MacOS and iOS.
When this was originally announced, this was an ambitious undertaking. Google's ownership of the Gemini LLM meant that they could, from the ground up, integrate AI into Android at a granular level. It has given Android a leg up regarding AI integration into a mobile OS.
While this may be a better approach, Apple has done one thing that I find interesting. At least in the short term, they are AI-enabling their own apps.
Apple has integrated its AI, Apple Intelligence, into several of its apps. Here are some key examples:
Apple is also allowing other apps to utilize the on-device AI model at the core of Apple Intelligence.
Their rifle-shot approach to AI in their apps is important, but given that AI has a global reach on data, the criticism that it limits the scale and complexity of AI features compared to cloud-based systems is legitimate.
This has led some analysts and media to suggest that Apple needs to acquire one of the existing LLM companies to help deal with this global AI scaling. While that is an interesting idea, I don't see that happening.
Apple is getting better at using existing LLM partnerships and this approach. In the process, I believe they are working on their own home-grown LLMs to give them the control they need to keep their customers' data private and give them the kind of privacy Apple excels at with its products.
In a great analysis of Apple's AI strategy, Ed Handy, writing in the Cult of Mac, argues that Apple's slow rollout is not a crisis. He suggests that-
"Apple isn't leading in AI — and most users won't notice Artificial intelligence is the hot technology of the 2020s, and Apple is far from the forefront in its development. OpenAI's ChatGPT chatbot makes Apple's Siri seem like a high school science project. Google Gemini creates pictures that make anything from Apple's Image Playground look laughable. The AI-enhanced version of Siri won't reach customers until a year after Apple initially expected. None of that matters, though. Not really.
Let's take a look at Google's Android operating system to see why. Android got out ahead of iPhone with integrated AI features, but it didn't make users happier. The most recent American Customer Satisfaction Index survey indicates that Samsung users are 1% less pleased with their Android-powered smartphones than they were a year ago. Satisfaction with Google and Motorola Androids both decreased by 3%. But the survey also found that iPhone users are 1% less satisfied. What this means is that cool new AI features, or the lack thereof, have no effect on what typical users think of their phones."
As one who has tracked Apple for over 40 years, I can attest that Apple marches to the beat of its own drum. And the way they deliver their Apple Intelligence is not influenced by outside criticism.
Apple has historically excelled at creating new products and services. While some of the criticism has merit, Apple's approach to AI-enabling its apps is still a solid strategy with room for much innovation over time.
Disclosure: Google, Meta, Samsung, Microsoft and Apple subscribe to Creative Strategies research reports along with many other high tech companies around the world.
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