Published on 02-13-2025
Artificial intelligence (AI) is upending conventional thinking on disruptive innovation theory. Traditionally, established firms — "incumbents" — in financial services took a wait-and-see approach to adopting to emerging technology, holding out until it was proven or derisked.
Today, they’re embracing artificial intelligence to drive efficiency and innovation.
This shift is driven by several factors: powerful underlying large language model technology, exponential growth in data parameters, growing confidence in the scaling parameters and rapid decline in costs to train models and draw inferences.
The breakthrough factor, though, is the user experience. It has made a new underlying technology radically accessible, and easier than ever to integrate into daily workflows.
Rather than waiting and ceding control, incumbents are taking a proactive stance. Leaders across the industry are saying "we need to embrace it (AI)." They suggest that it has applicability across their value chain, across every product and service. Firm leaders and shareholders are demanding that they invest in capital, talent and culture.
These incumbents are positioned for this moment. They can leverage their brands and customer relationships. They also dominate in data and are becoming a talent magnet, which are two defining aspects for implementation.
There is no AI or Gen AI without the data. Incumbents have it in abundance. They sit on vast interaction and transaction datasets, as well as contextual insights like a life event or customer’s sentiment.
And on talent, financial services are becoming a destination. As The Wall Street Journal recently pointed out in "Why the Coolest Job in Tech Might Actually be in a Bank”, financial services jobs for AI engineers and data scientists are more desirable than they have ever been.
Talent is asking incumbents if it is a priority. And the commitment is coming top down from boards and CEOs.
Atul Kamra is managing partner at St. Louis venture firm SixThirty and former Head of Advice for Wells Fargo Advisors. In previous roles, he was president of First Clearing, Wells Fargo’s custody and clearing business, and Partner with Booz & Co. He has a longstanding commitment to education, serving on the Boards of Directors for the St. Louis Public School Foundation and Webster University. He currently serves on the advisory board for the Daniels School's new Master of Business and Technology program.
