Recent data from Evident, an intelligence platform that benchmarks and tracks AI adoption across the financial services sector, has highlighted a notable surge in European banks' investments in AI startups.
European banks issued 45% of the global financial industry's AI investments in 2023, reflecting a significant rise from previous years. Despite an overall decline in venture capital activity globally, European banks are nearly on par with their North American counterparts in AI investment. And while deal flow in Europe declined by 25%, it fared better than North America's 42% decrease.
Overall, American multinational investment bank Citigroup took the lead in the number of AI venture investments, followed by Morgan Stanley and BNP Paribas. BNP, which was at the forefront among European banks, has also been a major backer of Mistral AI, Europe's prominent competitor to OpenAI.
Globally banks have almost universally increased investments in AI startups over the past decade but they are taking different approaches. Since 2010, Goldman Sachs and First Citizens are far in the lead in number of AI investments made. However, other banks — such as Capital One, Citigroup, and Wells Fargo — have focused on fewer investments that are more directly tied to their strategic objectives. Notably, all three of those firms have teams dedicated to such investments, implying stronger central planning around AI strategy.
"Startup investment is a risky business when viewed purely in terms of direct financial returns, however, our latest data shows that many banks are also investing in AI for strategic purposes – namely, to gain front-of-queue access to cutting-edge AI technologies, market intelligence and expertise," said Alexandra Mousavizadeh, CEO of Evident. "Backing innovative AI startups can help banks accelerate on the roadmap to AI maturity, and the European banks’ growing share of AI ventures is a positive sign for their long-term AI capabilities."
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