Banking industry investment into early-stage AI companies has been dominated by five U.S. banks for more than a decade, according to a new report from Evident – an intelligence platform that equips bank leaders with the data and insights they need to accelerate their AI transformation.
Evident’s latest report, AI Innovation in Banking, shows that from 2010 to 2023, U.S. banks have led the way in investing in early-stage AI companies to accelerate their adoption of the emerging technology.
Of the 60 largest North American and European banks, just five U.S. banking giants – Wells Fargo, Goldman Sachs, First Citizen, Citigroup, and JPMorgan Chase – were responsible for almost 50 percent of early-stage AI investment deals between 2017 and 2022.
North American banks accounted for twice as many AI deals as their European counterparts.
Nevertheless, AI investment is growing, and European banks are playing catch-up. Ninety percent of AI-related investments were made by U.S banks in 2015, but, according to the study, this has since decreased to 60 percent in 2022.
Evident also found that North American banks put out six times more research and filed 99 times more patents than European banks – evidence of a widening innovation gap between the two markets.
North American banks are doubling down on AI patents, Evident’s report says. More than 1,400 patents were filed in 2021 alone.
The report notes that nearly 15 percent of all AI patents filed by banks are focused on one competitive area: trading. This is followed closely by payments, user experience (with a natural language processing focus) and compliance.
Evident said that banks that are building “AI ecosystems” are pulling ahead in the race. For example, Capitol One leads the way in terms of active AI/ML open-source repositories on GitHub – which is central to its innovation strategy.
“Getting AI innovation right is key for the banks that wish to prosper in the coming decade,” the report notes. “This will require a mixture of building intellectual property internally, but also pulling in the best of external developments. There are multiple resources to mine and levers to pull – from research and patents, to partnerships and the wider academic, industrial and public sector ecosystems in which the banks operate.”
Evident made ten recommendations that innovation leaders in banks should act on now, including establishing an AI innovation strategy, building an AI research team, and fostering relationships with strong AI universities.
“There was no question about the strategic importance of AI innovation to both running and changing the bank, and, of course, to ultimately deliver better products and services for customers, continue the quest for operational excellence, and enhance trust and security,” Evident’s report says.