Nearly every Canadian bank now incorporates artificial intelligence (AI) in some form, but the most substantial benefits are derived from its application in combating criminal attacks.

A Major Focus Area

According to a study by GFT, nearly 75% of Canadian banks utilize AI for fraud detection. Similarly, about two-thirds leverage it to enhance cybersecurity measures, while close to 68% use AI to improve customer service.

Demonstrating Positive Returns

Nearly all the surveyed banks report that their AI investments have yielded positive results. However, the most significant returns come from cybersecurity efforts, with 23% citing it as the area delivering the highest ROI. Fraud detection follows closely at 22%, and automated customer support ranks third at 19%.

Back-Office Focus

The study also highlights that AI has played a larger role in back-office initiatives than in customer-facing ones. While most retail banks have invested in improving customer service through AI, only 18% report seeing measurable results in this area. Conversely, although only about a third of the banks have implemented AI for internal operational functions, the majority report that these applications deliver the greatest value.

Challenges and Opportunities

However, AI presents both an opportunity and a challenge for these banks. Half cite cybersecurity risk as their top concern when considering AI adoption. With AI systems handling sensitive data and influencing critical decisions, banks are increasingly caught between the need to innovate and the necessity of ensuring robust protection.

Seeking Expert Support

Overall, 63% of Canadian banks now use AI in some form. They allocate more than a third of their IT budgets to this technology and plan to increase that investment by 20% over the next five years.

Banks recognize they will need support to fully harness AI technology. More than half said they plan to adopt a hybrid approach, combining in-house and outsourced teams to scale their AI efforts. An equal number of banks prefer to outsource their AI efforts to external partners as those that prefer to build strong internal capabilities.

AI has become an absolute necessity in fraud prevention and detection,” said Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research. As attacks become more sophisticated and complex, AI and machine learning are detecting anomalies and suspicious behaviors in a way that older technology can’t. The key is that these models improve over time, making fraud detection more precise as time goes by.”