AI Transformation for Financial Services

The financial sector is experiencing twin disruptions. First, fintech and AI are upending traditional banking models – from mobile banking and digital payments to AI-driven trading and robo-advisors.

Use Cases

Banks and insurers heavily invest in AI to automate processes, personalise offerings, and detect fraud or anomalies faster. This is raising the competitive bar and forcing even incumbents to transform their IT and operations. Second, climate financial risk is a game changer for banks and insurers.

They carry exposure to all other sectors via loans, investments, and insurance policies. If climate change causes $1 trillion in corporate losses (as some studies forecast over the next decades​, much of that risk flows back to financial institutions.

Thus, banks globally – including Australia’s big four – are mapping the carbon intensity of their lending portfolios and pledging to align with net-zero emissions by 2050.

Insurers are recalculating premiums as “once in a century” weather disasters become far more frequent. In fact, the financial industry reported almost 80% of all reported financial risk from climate change in one global survey, reflecting how concentrated these risks are in finance​.

We also see increasing regulation: for example, Europe’s sustainable finance rules or APRA’s guidance in Australia require financial firms to incorporate climate scenarios into risk management.

This sector is therefore under great pressure but also equipped with the analytical talent and capital to innovate – expect to see finance drive sophisticated new climate risk modeling (using AI, as described earlier) and fintech solutions like green financing platforms or climate risk transfer instruments.

Notably, financial services and energy – two very different domains – arguably face the greatest combination of technology disruption and climate urgency, globally and in Australia.

This is reflected in Australia’s case as well: a recent analysis by Boston Consulting Group found that Australian companies leading in digital transformation often come from sectors like financial services and resources, which aligns with where the pressures are highest​.