CNBC's Leslie Picker joins 'Squawk on the Street' to discuss a new report from Boston Consulting Group on how banks are integrating AI into their workflows.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

A report from Boston Consulting Group indicates that while banks are investing heavily in artificial intelligence, most are taking a cautious approach, using AI primarily for limited productivity improvements rather than large-scale transformation. Only about a quarter of banks are using AI strategically, with concerns over regulatory compliance and fragmented data cited as significant obstacles.

Despite spending over $30 billion on AI last year, banks are seeing minimal cost savings so far, with only around 2 percent reported by a quarter of firms studied. The report warns that banks risk losing their competitive edge if they do not accelerate AI adoption, and notes that full deployment could lead to significant workforce reductions by 2030. Projected AI spending in the sector is expected to reach $90 billion by 2030.

Most banks are 'playing it safe' with AI, report says

Welcome back. While companies across the board are working to integrate AI, one industry may be falling behind. We turn to our Leslie Picker this morning with that story. Morning, Leslie. Hey, good morning, Carl. That's right. A new report out saying that banks are, quote, falling behind when it comes to AI. While the industry is doing plenty of experimenting, only about a quarter of firms are using the technology strategically, according to Boston Consulting Group. The research found that most banks are, quote, playing it safe, using AI for individual productivity improvements rather than broad-based transformation. Now, there are several reasons for this. The bank's data is notoriously fragmented and general-purpose, large-language models aren't applicable. Additionally, 61 percent of firms told BCG that running afoul of regulation is a top concern in fully embracing the technology. But the report serves as a reckoning for an industry that spent more than $30 billion on AI last year, more than any other industry except for software. And the stakes are high, with BCG saying the window is quickly closing for banks to fully embrace AI or risk losing their competitive position. The report says Gen AI and Agentic AI will dismantle current moats that banks currently enjoy, things like complexity and sticky customers and opaque pricing. However, the double-edged sword in all of this is if or when banks fully lean into AI, there could be a drastic reshaping of the workforce. One unnamed large bank in the report is said to be targeting a 35 to 50 percent reduction in headcount by 2030 with full potential deployment of AI, guys. Sounds like we've got a long way to go since then, but until then. But if you think about it, that their biggest cost is labor, that's huge opportunity for this industry. Yeah, it's remarkable. In this report, they said that about a quarter of the firms that they studied have only seen about 2 percent savings in terms of cost at this point in time and using AI. So if you think about where we get from a 2 percent savings in cost to, say, 50 percent savings as a result of some headcount reductions, I mean, that's pretty dramatic if you just look at the headcount savings. Now, the technology spend is huge and it's projected to get even bigger. I think by 2030, there's an expectation using that same source that we cited earlier to be about 90 billion dollars on spend in AI by 2030. So a lot more spending in terms of keeping up with the technology. But perhaps you could see savings in terms of headcount. Now, the key question is, are they doing enough right now to kind of upskill and train the current employees or to like look at the future potential of employees to fully take advantage of that? Also bullish for the AI sector, if you got that kind of capex spending over the next few years. Leslie, thank you. Really interesting read on how banks are using AI.

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Rise of AI