The latest findings from the Capgemini Research Institute's 20th World Retail Banking Report show a major gap in the readiness of retail banks to implement AI-driven transformations at scale. Despite 80 per cent of retail bank executives recognising the potential of generative AI to advance technology, only 6 per cent of retail banks have developed enterprise-wide roadmaps for AI-driven transformation.

In response to macroeconomic uncertainties, retail banks are under pressure to adapt their business models strategically. The report highlights that productivity and efficiency are top priorities for bank leaders, with 70 per cent planning to increase investment in digital transformation by up to 10 per cent in 2024.

However, the study suggests that banks are ill-equipped to embrace intelligent transformation effectively, lacking preparedness in applying advanced technologies like AI, machine learning, and gen AI to drive innovation and efficiency.

The report stresses on the urgency for banks to act swiftly to avoid what it terms "generative AI silent failure." With only 4 per cent of retail banks demonstrating high scores in business commitment and technology capabilities, and a staggering 41 per cent scoring average, it is evident that many banks are not adequately prepared for the intelligent banking future. Regional disparities further highlight this issue, with North America, Europe, and Asia-Pacific exhibiting varying levels of readiness.

To navigate ongoing challenges and ensure sustainable growth, banks are encouraged to focus on intelligent solutions embedded with AI-driven capabilities. However, the report notes a lack of measurable success, with only 6 per cent of banks establishing key performance indicators (KPIs) to measure AI impact and continuous monitoring.

Nilesh Vaidya, Global Industry Head of Retail Banking and Wealth Management at Capgemini, warns against the risk of technological laggardness, stressing the need for banks to adopt solutions responsibly and establish practices that build trust and customer intimacy.

Generative AI holds immense potential to enhance efficiency and customer experience across the banking value chain. Bank employees welcome generative AI copilots to automate operational tasks, with potential time savings of up to 66 per cent. Additionally, conversational AI could address customer dissatisfaction with chatbots and alleviate call abandonment rates.