Global trends are propelling adoption of advanced digital tools in financial services. Leaders need to prepare their organizations for this shift or risk being left behind. That was one of main takeaways we picked up during the Singapore Fintech Festival 2024 (SFF2024), as reflected in our joint report, “AI And Quantum: Catalyst For Transformative Growth In Financial Services,” with the Global Finance & Technology Network (GFTN). The conference marked a pivotal juncture in how banking leaders are talking about artificial intelligence (AI) and quantum technology to transform operations.

From highlighting real-world use cases in enhancing operational efficiency and customer experiences, to discussing the regulatory environment, the use of AI in the financial services sector was a major theme.

The nascent field of quantum technology was also explored as a tool to transform financial computations and problem-solving capabilities. Experts emphasized the importance of understanding the threat to current cryptographic methods, urging financial institutions to begin preparing for a post-quantum world.

Key themes in AI and quantum shaping the future landscape of financial services

Recognizing the evolving use of AI in financial services and value capture

AI’s potential to increase efficiency, improve effectiveness, and elevate customer experiences across financial services is emerging with use cases of varying scales and nature. A noticeable shift is occurring with generative AI as organizations transition from experimentation to true value-focused approaches that deliver measurable business outcomes. There is also a recognition that the capabilities of predictive AI remain insufficiently tapped for advanced applications, even within organizations at the forefront of technology adoption, particularly in areas such as hyper-personalized products and services.

Establishing a comprehensive AI operating model

Merely implementing the latest technology is not enough to unlock the full potential of AI. Achieving success requires a comprehensive operating model that prioritizes solving for the customer, supported by pragmatic prioritization, governance, effective risk management, and organizational readiness. The most successful organizations understand the importance of getting the building blocks right, too, before jumping into wider use of AI. This begins with adhering to user-first and customer-first principles, prioritizing value creation rather than adopting AI for its own sake.

Success also hinges on clearly defining the roles of model, data, and AI governance teams within this new, complex, and overlapping ecosystem. Establishing fundamental controls from the outset is crucial for building customer trust.

Navigating the evolution of policy and public-private partnerships on AI adoption

The AI regulatory landscape is rapidly evolving, with policymakers worldwide recognizing the need to balance innovation and risk management to accelerate AI adoption. International cooperation on AI regulations is taking shape and public-private partnerships have emerged as a vital accelerator of safe AI adoption through the funding and support of various initiatives. Overall, there is an impetus for regulations to serve as catalysts for progress rather than inhibitors to innovation.

Exploring the convergence of AI and quantum technology

Although still in its early stages, quantum technology presents both transformative opportunities and significant security challenges for the financial services sector. The industry is evaluating the potential and day-to-day role of quantum technology. Many leading institutions are currently in the exploration phase, and limited applications have been realized as significant technological breakthroughs are necessary to unlock the full potential of quantum technology. Nonetheless, financial institutions should start preparing for a quantum future, including understanding the risks.

Quantum technology has the potential to accelerate machine learning and significantly enhance AI’s performance. However, substantial challenges remain to be addressed before realizing the full potential of this convergence. As the industry awaits commercialization, there is a sense of anticipation about how the convergence can be achieved.

The future outlook for AI and quantum technology in the financial sector

As AI and quantum technology continue to reshape the landscape of the financial services sector, organizations face both unprecedented opportunities and challenges. It is essential to proactively adapt to stay competitive and avoid being left behind. Here are five calls to action that organizations should embark on:

Chase the value of AI and quantum technology, not the hype

Focus on initiatives that deliver tangible business value, leveraging pilot projects to validate outcomes and guide investment.

Collaborate with industry players and regulators

Develop partnerships with industry stakeholders and regulators to share insights and lessons, establish best practices, and ensure compliance early on.

Educate the workforce and foster a data-driven culture

Empower employees through training and upskilling, enhancing data literacy and continually promoting a data-driven culture

Reinvent AI governance to drive adoption

Strengthen AI governance frameworks while focusing on organization-wide adoption through targeted training and support.

Cultivate a proactive AI risk management culture

Establish an integrated AI risk management framework that not only identifies and mitigates emerging risks but also encourages a culture of continuous learning and adaptation.

By embracing innovative practices, effectively managing risks, and actively exploring the potential of these technologies, coupled with pragmatic regulatory approaches, organizations can contribute to a future where these advancements serve as a catalyst for positive change.