CURRENCIES RISING INTEREST Generative AI risk and reward S&P Global's report on AI in the banking sector looks at the current state of AI and its potential future in banking-but also its associated risks. Who uses AI the most? Banking, financial 8% 8% 10% services and insurance have a notable portion of the global machine learning market share: 12% 12% 14% Global machine learning market share (by industry) 18% 19% AI could optimize three areas of banking: 1. Business franchise differentiation 2. Financial performance 3. Risk management IT and telecommunications: 19% | Health care: 12% | Retail: 12% | Manufacturing: 10% | Advertising and media: 8% | Banking, financial services and insurance: 18% | Automotive and transport: 14% Other: 8% What's the risk? 40% Ethical concerns: AI biases can result in customer discrimination on credit decisions and financial inclusivity. Security, privacy and control risks: AI may inadvertently gather public data without consent, or externalize confidential data. Budding AI regulation: The regulatory requirements for AI are still new and vary by jurisdiction. Investment required: Banks with legacy IT infrastructure may experience execution and operational risk due to technical limitations. $450 million Predicted global spending on artificial intelligence by 2027 12 // ICBA Independent Banker // April 2024 of financial services companies predominately rely on machine learning in fraud detection and financial forecasting.