In a typical case of the sick needing doctors the most, it has been revealed that traditional banks are more optimistic than their fintech counterparts about tech and AI-powered financial services industry growth. This was revealed in a global survey report by the global law firm, DLA Piper titled: <a href="https://r.news.africa-wire.com/mk/cl/f/sh/7nVU1aA2nfy8R0V68g49LdYVd8fYEPj/ECbqgUdqHSmL" target="_blank" rel="noopener">Financial Futures: Disruption in global financial services</a>. 
According to the report, 88 per cent of bank executives surveyed are quite optimistic about financial services industry growth over the next couple of years. This is in contrast with leaders in the financial technology (FinTech) sector with 72 per cent of them feeling positive about change in the sector. 
For traditional banks, the high level of optimism is driven mostly by digitalisation and advancements in technology, with 71 per cent of executives surveyed attesting to this as the motive behind their enthusiasm. The launch of new products and services to drive growth is the next biggest reason for optimism with 55 per cent of respondents alluding to this. Changing consumer and investor behaviours is the other reason with 38 per cent of executives citing this.&nbsp;&nbsp; 
For executives who aren’t optimistic about tech-powered strides in the sector, a lack of clarity and a proportionate approach is cited as the major reason with 58 per cent of respondents indicating that regulation complexity around technology is a key challenge globally. Nearly three quarters of them, or 73 per cent, went further to say that current regulations stifle innovation efforts. 
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“While our survey shows a high level of optimism within the financial services sector, our research reveals a need for FS organisations to go further in planning around resourcing and regulatory horizon scanning in order to navigate the opportunities that AI and other new technologies offer,” Global Co-Chair of Financial Services sector group at DLA Piper, Mark Dwyer&nbsp;noted. 
See also: <a href="https://technext24.com/2024/08/20/ai-will-make-a-better-boss-than-humans/#google_vignette">40% of young Africans believe that AI will make a better boss than humans – Report</a> 
Overall, eight in 10 respondents expressed optimism about future industry growth prospects for&nbsp;the financial services industry. While the numbers are significantly high in the UK and US with 93 per cent and 90 per cent confidence levels respectively, respondents out of Africa have remained pretty conservative with only 50 per cent of them showing any real enthusiasm. 
Despite this low confidence levels, financial leaders are still backing technology to make a major change. 
<h4 id="ai-for-transformation-ai-as-the-main-challenge" class="wp-block-heading">AI for transformation, AI as the main challenge</h4> 
Many financial services executives surveyed admit that artificial challenge is a gamechanger in the industry, with majority of them, 86 per cent, believing that AI will transform the sector. However, a significant number, more than half the respondents (53 per cent) consider the technology as one of their main challenges. 
Fewer still, 39 per cent, expressed a willingness to hire experts in the field of AI and imposing governance and oversight structures to maximise the related opportunities. Half of the companies surveyed lack in-house specialists and are opting to work with specialist subcontractors. 
The report went on to note that without this internal talent, businesses risk falling behind the curve in the future.&nbsp; 
While ethical AI concerns are highly documented, only 56 per cent of the organisations surveyed are developing ethical frameworks to guide their efforts. Without ethical frameworks in place, businesses put themselves at risk of not meeting stakeholder, customer and board demands around AI deployments. It is vital for businesses to have a clear plan and direction in place before they start their AI journey. 
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Despite not having frameworks to use, businesses report a clear understanding of the benefits AI can offer, such as managing regulatory compliance 63 per cent; followed by fraud detection and prevention 62 per cent. A fifth of them, 21 per cent of businesses are worried about compliance issues as they look to manage the cyber security and data protection risks associated with AI. 
“In light of the challenges our report identifies, financial services organisations are placing a higher focus on horizon scanning, as well as mapping out global regulatory implications. Balancing adequate and over-regulation in developing markets is always challenging. However, it is crucial for regulations in African markets to keep pace with international developments in order to limit regulatory arbitrage and protect the sector’s integrity. Proportionate regulation in the sector is key, and can be a competitive advantage in attracting business and investment,” Country Managing Partner, DLA Piper South Africa Johannes Gouws added. 
The post <a href="https://technext24.com/2024/09/21/ai-traditional-banks-optimistic-fintechs/">Traditional banks more optimistic than Fintechs about tech-powered industry growth- Report</a> first appeared on <a href="https://technext24.com">Technext</a>.

Traditional banks more optimistic than Fintechs about tech-powered industry growth- Report

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