Banking behemoth Wells Fargo, based in San Francisco, appears to be carving out an ostensibly commanding role in the AI-infused banking metamorphosis. This assertion stems from a recent report by banking data analyst Evident, though it’s not without controversy.
AI Overkill: The Real Cost to Banking
AI-related ventures are currently being peddled as a magic bullet for banks to set themselves apart with innovative products and processes. It’s a claim that’s not without its critics. Indeed, prominent banks are investing in AI to ostensibly gain a competitive edge in sectors such as high-frequency trading and payments, while also claiming to improve their performance in areas ranging from fraud detection to marketing.
The Puzzling Triumph of Wells Fargo in AI
The banks evaluated by Evident reportedly employ over 650 AI researchers, seemingly making them key combatants in the ongoing talent war. Surprisingly, North American banks were responsible for 80% of all bank AI research, made 60% of all AI-related bank investments in 2022, and were the sources of a staggering 99% of all AI-related bank patents in 2021.
While JPMorgan Chase & Co. is leading the field in research, and Capital One is leading in patents, it’s Wells Fargo that’s questionably at the forefront of investments.
Wells Fargo’s AI Bet: High-Stakes Gamble or Folly?
Known for its numerous scandals, Wells Fargo has, in recent years, launched a slew of AI-powered tools such as virtual assistant Fargo and its somewhat overhyped Customer Engagement Engine (CEE). This CEE tool, purportedly utilizing modeling and adaptive machine learning to detect customer signals in real-time conversations, aims to offer custom-tailored service-related messaging. An open-source data science platform is also in the works, although questions remain about its practicality and potential impact.
Wells Fargo has notably endorsed the Biden administration’s AI Bill of Rights, a move that appears more performative than substantive.
Banking on AI: Is it Worth the Risk?
Wells Fargo’s head of digital and AI capabilities engineering, Swarup Pogalur, has acknowledged that “financial services will see a significant disruption in how we build products and services we offer.” However, many industry insiders argue that this AI-driven “disruption” is fraught with risks and uncertainties.
“Maintaining a ‘wait and see’ approach to AI innovation looks increasingly risky given the pace at which the leaders are accelerating away from the rest of the field,” warned Annabel Ayles, co-founder and COO of Evident. It’s a statement that, given Wells Fargo’s track record, could prove prophetic.