Over Half Of Banks Aim 10 Pc Cost Reduction By 2030, Integrating AI Top Priority: Report

(MENAFN- IANS) New Delhi, Sep 1 (IANS) A global report on Monday indicated that 53 per cent of banks plan to reduce costs by at least 10 per cent by 2030. As many as 29 per cent banks are aiming for reductions exceeding 20 per cent. However, only 24 per cent have met their cost reduction targets to date.

A survey that interviewed 228 banks revealed that embedding AI into their work, addressing cyber frauds and improving data analytics capabilities were the three main agendas, the report from KPMG International said.

The report shows that only 18 per cent report high success in transformation efforts, while 40 per cent believe they are well-positioned to lead change or transformation.

Analysts at KPMG said that most banks could probably achieve a 10 per cent reduction in costs through blunt 'cost out' targets or by applying AI to discrete processes.

“Cutting costs by 20 or 30 per cent, however, will require banks to undertake some fairly significant operational transformation initiatives to make the business more efficient, effective and productive. You can't achieve that through headcount reductions alone,” the report noted.

AI and automation are widely used, with 52 per cent using it for fraud detection and document processing. As much as 50 per cent banks use it for customer interactions through chatbots. 82 per cent of banking leaders plan to form startup partnerships to drive innovation.

Nearly half of all banks believe they can grow their earnings by more than 2.5 per cent over the next three years, while one in five say they expect growth of over 5 per cent, the report added.

"The pace of change in technology, regulation, and customer behaviour demands a bold and strategic response. The report sets out a new agenda for transformation-one that places trust, innovation, and agility at the heart of banking's future," Hemant Jhajhria, Head of Consulting, KPMG India.

With tighter margins and increasing regulatory demands, banks are turning to digital technologies, automation and AI to streamline operations, reduce costs and enhance service delivery, the report noted.

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