The impact of artificial intelligence on the Australian finance industry

Report for the Australian Finance Industry Association

Sapere and King & Wood Mallesons (KWM) were engaged by the Australian Finance Industry Association to research the impact of artificial intelligence (AI) on the Australian Finance Industry.

The purpose of the research was to identify and analyse:

• the current and expected medium term use cases that involve the innovative use of AI in the finance industry
• the economic impact of adoption of GenAI in financial services for the Australian economy
• the regulatory challenges, risks and opportunities
• the potential governance approaches that can be adopted by organisations in relation to implementation or deployment of GenAI use cases.

In this report we distinguish between: Narrow AI (being AI that typically provides a ‘point’ solution for a particular use case, such as decision-making based on predetermined algorithms and rules); and Generative AI (being AI that generates new content based on training data in response to prompts).

As a key input into the research, KWM and Sapere surveyed and interviewed a number of participants in the Australian finance industry on their use and adoption of AI. Participants included banks, non-bank lenders, finance companies, fintechs, providers of vehicle and equipment finance, car rental and fleet providers, as well as service providers that provide technology or AI powered services.

This report uses the answers we received through interviews with participants and review of the current literature and market commentary, to analyse the impact that AI is having, and that we expect AI to have, on the Australian finance industry.

The estimated productivity gains in the finance sector provided the basis for modelling the potential scale of economic impacts to the Australian economy. Under our medium scenario this is estimated to add an additional $48.9 billion to GDP (in NPV terms) over the ten years to 2035.

The Sapere team involved were David Graham and Jeremy Thorpe.

More information can be found on the AFIA website:  AFIA urges government to adopt supportive AI frameworks to unlock billions in economic growth