Home Finance Retail Surpasses Banking as Main Driver of AI Investment

Retail Surpasses Banking as Main Driver of AI Investment

With numerous industries investing heavily in AI/cognitive-based projects, the global spending on artificial intelligence and cognitive systems is anticipated to hit $19.1 billion in 2018.

This figure will mark an increment of 54.2% compared to the money spent in 2017. In fact, the IDC Spending Guide on Cognitive Artificial Intelligence Systems recently predicted that AI and cognitive spending would reach $52.2 billion in 2021.

Even so, the expenditure would attain a CAGR or compound annual growth rate of 46.2 percent over the 2016-2021 forecast duration.

David Schubmehl, research director at IDC, said that the awareness and interest of AI are at an all-time high.

As such, every organization and industry ought to be assessing AI to see how it would influence their go-to-market efficiencies and business processes.

READ MORE: 10 Powerful Applications of Artificial Intelligence in Retail

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According to IDC predictions, 40 percent of digital transformation projects will utilize AI capabilities by 2019. What’s more, 75% of business applications will employ AI by 2021.

David added that AI is transforming how humans interact with computer systems from forecasts, recommendations, intelligent process automation and advice to automated customer service representatives.

In 2018, retail is expected to surpass banking and become the industry leader in cognitive and AI spending.

Furthermore, retail firms will spend $3.4 billion on various AI use cases this year such as expert shopping advisors and product recommendations, merchandising for Omnichannel operations and automated customer service agents.

A significant portion of the $3.3 billion to be spent by the banking industry is predicted to go to program advisors and recommendation systems, fraud analysis and investigation, and automated threat intelligence and prevention systems.

Discrete manufacturing will hold the third spot regarding AI spending for investing $2 billion.

The money will go towards recommendation systems as well as automated preventative maintenance and quality management investigation.

Healthcare providers, the fourth largest industry, will spend a significant amount of its $1.7 billion investment on both diagnosis and treatment systems.

The cognitive and AI use cases expected to witness the most substantial spending in 2018 include automated customer service agents at $2.4 billion and with massive investments from the telecommunication and retail industries.

Other use cases are automated threat intelligence and prevention systems at ($ 1.5 billion) with significant investments from the telecommunications, utilities and banking industries, as well as sales process recommendation and automation ($1.45 billion) with the media and retail industries as the spending leaders.

The use cases forecasted to see rapid spending growth throughout the 2016-2021 forecast duration include public safety and emergency response, pharmaceutical research, and discovery and expert shopping advisors and product recommendations at 75.4%, 70.5%, and 67.3% CAGR respectively.

READ MORE – Top 25 AI Software for the Banking Industry

Regarding geographic location, the United States will provide over three-quarters of the entire spending on cognitive and AI systems in 2018 with banking and retail industries as the leaders.

The second-largest region will be Western Europe with discrete manufacturing, retail, and banking leading the investment.

Furthermore, Japan will top the spending growth over the 2016-2021 forecast period with 73.45 % CAGR while Asia /Pacific (excluding China and Japan) will follow suit with 72.9% CAGR.

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KC Cheung
KC Cheung has over 18 years experience in the technology industry including media, payments, and software and has a keen interest in artificial intelligence, machine learning, deep learning, neural networks and its applications in business. Over the years he has worked with some of the leading technology companies, building and growing dynamic teams in a fast moving international environment.
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