Although nearly all Canadian banks are now using artificial intelligence in some capacity, the biggest returns are coming from its role in fighting off criminal attacks.
According to a new study from GFT, nearly 75% of Canadian banks are deploying AI for fraud detection, while roughly two-thirds are using it to bolster cybersecurity. Close behind, nearly 68% report using AI to enhance customer service.
Nearly all surveyed banks said their AI investments have paid off in some form. However, the strongest returns are coming from cybersecurity efforts, with 23% citing it as the area delivering the most significant ROI. Fraud detection follows at 22%, with automated customer support ranking third at 19%.
A Back-Office Function
That highlights another key finding from the study: AI has played a larger role in back-office initiatives than in customer-facing ones. Most retail banks have invested in AI to improve customer service, yet only 18% report seeing measurable results in that area. In contrast, although only a third have implemented AI for internal operational functions, the majority of those report that back-office applications are delivering the greatest value.
However, AI presents a double-edged sword for these banks. Half cite cybersecurity risk as their top challenge when considering AI adoption. With AI systems handling sensitive data and influencing critical decisions, banks are increasingly caught between the drive for innovation and the need for protection.
Searching for Outside Help
Altogether, 63% of Canadian banks are now using AI in some form. They are already allocating more than a third of their IT budgets to AI and plan to increase that investment by 20% over the next five years.
Banks recognize that they will need support to fully harness the technology. More than half of those surveyed said they plan to adopt a hybrid approach, combining in-house and outsourced teams to scale their AI efforts. An equal number of banks said they prefer to outsource their AI efforts to external partners as those planning on building strong internal capabilities.
“AI has become an absolute necessity in fraud prevention and detection,” said Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research. “As attacks become more sophisticated and complex, AI and machine learning are detecting anomalies and suspicious behaviors in a way that older technology can’t. The key is that these models improve over time, making fraud detection more precise as time goes by.”
