AI Report Digital - Flipbook - Page 5
AI Defined
In an October 2023 executive order, President Joe Biden’s administration defined artificial intelligence as “a
machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments. Artificial intelligence systems use machine- and
human-based inputs to perceive real and virtual environments; abstract such perceptions into models through
analysis in an automated manner; and use model inference to formulate options for information or action.”
The Financial Stability Oversight Council opted for a simpler definition in its 2023 annual report, writing that
AI “generally entails machines doing things previously thought to require human intelligence. … Given this
broad definition of Al, it is not surprising that there is significant variety in Al methodologies and uses and
that there is not always a stark difference between AI and more traditional quantitative modeling.”
The first half of the 2020s has been marked by a “stepchange increase in ambition and investment” in AI use cases
To read more about use cases, go to page 8.
at the biggest global banks, according to an October 2023
report from Evident, a London-based research firm tracking
those efforts. “Banks are generating more ideas for AI use
AI technology has become more flexible and adaptive for
cases than ever before, face more pressure from leadership
business cases, which has allowed institutions like $60.9 bil-
demanding [return on investment], and need to keep up with
lion Valley National Bank, the bank unit of New York-based
the rapid pace of AI innovation,” the report said. “Working
Valley National Bancorp, to explore how to adopt it, says
out how to scale up use cases, deliver value, and orchestrate
Chief Operations Officer Russell Barrett.
the AI activities across the company has, in many banks,
become the mandate for newly established group AI leadership teams.”
Previous generations of machine learning tools that banks
used for business intelligence or modeling required “a lot of
investment to get something digestible in return,” Barrett
For example, JPMorgan Chase & Co., the largest bank in
says. Data inputs needed to be formatted, cleaned and struc-
the country by assets, has more than 300 use cases in pro-
tured; the models could be rigid and break.
duction, focused on “risk, prospecting, marketing, customer
experience and fraud prevention” along with payment processing and money movement, according to Chairman and
CEO Jamie Dimon’s annual investor letter published in April
2023. The bank has 900 data scientists, 600 machine learning engineers and a 200-person AI research group.
This shift from rigid tools to flexible technologies has led to
increased interest from banks of all sizes. More than half
of the bank executives and board members responding to
Bank Director’s 2023 Technology Survey said their bank’s
leaders had discussed allocating some of their budget or
other resources to artificial intelligence over the previous 18
As of the third quarter of 2023, Bank of America Corp. had
months; respondents representing banks between $1 billion
more than 760 artificial intelligence and machine learning
and $10 billion in assets indicated particular interest in the
patents in its portfolio. These patents make up 22% of the
technology. Most said their institutions were exploring use
patents the bank was granted in the first half of 2023.
cases that touched on customer service and fraud detection
ARTIFICIAL INTELLIGENCE: A REAL-WORLD APPROACH | 3
