Artificial intelligence (AI) is emerging as a force for change in the financial services industry, with the potential to transform how financial institutions operate, innovate, and compete globally. However, it faces challenges including a shortage of AI talent and limited collaboration between financial institutions and AI fintech startups.
The study, conducted by global consultancy Oliver Wyman in collaboration with the Monetary Authority of Singapore (MAS), explores how a city like Singapore can become a global hub for AI in finance, examines the biggest challenges faced by stakeholders in the ecosystem, and highlights the importance of attracting AI talent from around the world, stimulating AI investment, and fostering AI collaboration within the finance industry.
Singapore’s AI talent pool is inadequate
Oliver Wyman’s research is based on in-depth interviews and surveys of finance industry leaders and key players in the financial ecosystem. Revealed Challenges in finding talented AI talent, especially those with 5 to 10 years of industry experience.
56% of ecosystem participants surveyed said Singapore’s AI talent pool is not large enough, with widespread shortages across a range of AI-related roles, including principal data engineers, data analysts and lead AI scientists.
According to industry insiders, Singapore’s AI talent pool is expected to grow by Source: Oliver Wyman’s AI in the Financial Ecosystem Survey 2023 Edition,
The competition for global AI talent is fierce, with organisations across sectors and geographies competing for the same experts who are in high demand both locally and internationally.
To attract AI talent, stakeholders highlighted the presence of cutting-edge projects (98%) and the presence of prominent AI companies (96%) as important factors. These findings reflect the ambition and drive of today’s AI talent, who are looking for high-impact use cases and projects for their career development.
Livability considerations (96%), including cost of living and ease of cultural adaptation, are also among the main drivers attracting AI talent from around the world. This trend is evidenced by many prominent large technology companies and AI research firms offering attractive salary packages to strengthen their competitive position.
Key drivers of AI talent attraction worldwide, Source: Oliver Wyman AI Financial Ecosystem Survey 2023
Low collaboration
Beyond attracting AI talent, the survey also found that financial institutions are struggling to collaborate with AI fintech startups. For many AI fintech companies offering business-to-business (B2B) solutions, collaboration with financial institutions is essential to innovate and achieve success. However, concerns about regulation, security, compliance and reliability are barriers for financial institutions to consider partnering with fintech companies.
One of the major issues highlighted in the Oliver Wyman report is a lack of understanding of use cases. Financial institutions struggle to openly share their challenges with AI fintech startups, resulting in a disconnect between incumbents and startups. The result is a lack of tailored solutions, frustrating financial institutions and preventing deeper collaboration.
Additionally, a lack of data for model training is a major obstacle. Many AI solutions require massive datasets to train, validate, develop, and refine models, but these datasets are often regulated and inaccessible. According to an Oliver Wyman survey, 82% of stakeholders said they have difficulty accessing data for AI-based solutions.
Access to data to develop AI-based solutions, Source: Oliver Wyman AI Financial Ecosystem Survey 2023
Cultivating Singapore’s AI Fintech scene
Oliver Wyman advocates for the creation of AI-in-finance focused incubators and accelerators to attract and nurture AI fintech companies, providing startups with mentorship, exposure to investors, and an enabling environment for growth.
Furthermore, the introduction of a comprehensive, government-approved certification framework specifically for AI Fintech companies will help financial institutions to increase their trust in AI Fintech solutions. If this certification is aligned with global standards, it will not only increase the credibility of collaborations domestically, but also facilitate international expansion, and provide incentives for overseas AI Fintech companies to consider relocating to Singapore.
To improve the quality and accessibility of talent, Oliver Wyman advises stakeholders to implement upskilling programs and build a global network of AI expertise. Regulators can consider introducing mentorship and apprenticeship schemes to connect young AI talent with leading tech companies working on cutting-edge AI projects both locally and internationally.
Meanwhile, financial institutions need to equip their senior management with comprehensive AI knowledge and offer specialized courses that can cover important topics such as generative AI and other disruptive innovations in the field.
Finally, for smaller countries to compete with larger AI hubs for local talent and companies, it is important to establish a global, interconnected network of AI expertise and knowledge. Such collaborations could foster innovative technological advances, contribute to the growth of AI hubs, and help retain talent, Oliver Wyman said.
AI in Finance
AI has huge potential in finance, says McKinsey presume AI technologies have the potential to add up to $1 trillion in additional value to the global banking industry each year through increased revenue from personalized services, cost efficiencies, and using data to uncover new, previously unrealized opportunities.
Potential annual value of AI and analytics in global banks, Source: Building the AI Bank of the Future, McKinsey & Company, May 2021
In the AI space, Singapore is fast becoming a leading hub for investment, attracting significant venture capital (VC) funding. According to Oliver Wyman, the city-state has attracted approximately US$3 billion in VC funding to date, making it one of the top 10 countries globally for AI investment. This attraction is due to Singapore’s strong global brand, stability, and favorable regulatory environment, a sentiment echoed by 68% of respondents in the survey, who acknowledged the abundant availability of VC funding in Singapore.
VC-backed AI investments, Source: Oliver Wyman AI Finance Ecosystem Survey 2023
Featured Image Credit: Free Pick
