A new report by Citi Group projects that Artificial Intelligence (AI) will drive an increase of $170 billion in global banking sector profits by 2028. Forecasted through a client survey, the report anticipates AI to significantly transform the finance industry, potentially elevating total global banking profits to $2 trillion within the next five years.
This forecast represents a substantial 9 percent rise in the sector’s profit pool. According to Citi Group, “Just as the steam engine powered the industrial revolution, AI may commoditize human intelligence. Finance, a data-rich industry with clients adopting AI rapidly, will be at the forefront of change.”
The report highlights that 93 percent of respondents from Citi Group’s proprietary survey foresee higher bank profits driven by productivity gains, underscoring the strong optimism among finance sector leaders regarding AI’s potential impact on profitability. Increased productivity is expected through the automation of routine tasks, operational streamlining, and enabling employees to focus on higher-value activities.
The report also notes that General AI (GenAI) will significantly impact internal functions such as content and information management, coding, and software development.
However, Citi Group also emphasizes the challenges and ethical considerations accompanying the global shift towards AI-driven finance. Concerns include data security, regulatory compliance, ethical implications, and competitive dynamics. The report warns of operational and reputational risks posed by AI models generating erroneous information if AI chatbots were to operate autonomously.
Furthermore, AI-powered clients could intensify price competition, potentially reshaping the competitive landscape in the finance sector. The report suggests that digitally native firms like FinTechs and BigTechs may adopt AI more rapidly, posing a threat to incumbent firms burdened by legacy technology.
In light of these developments, Citi Group advises finance leaders to exercise caution regarding timelines, talent acquisition costs, heightened competition, rising client expectations, and increased expenses associated with greater AI adoption.
