AI may be broadly defined as the application of computational tools to address tasks traditionally requiring human sophistication (Financial Stability Board, 2017). In the view presented by FSB, ML is a sub-category of AI and refers to the method of designing a sequence of actions to solve a problem, known as algorithms, which optimize automatically through experience and with limited or no human intervention. In other words, ML is a science that is aimed at providing computers with ability to learn directly from the data, without applying a program created ex-ante.
Published in Chapter:
Digital Transformation in Banks of Different Sizes: Evidence From the Polish Banking Sector
Teresa Czerwińska (European Investment Bank, Luxembourg & University of Warsaw, Poland), Adam Głogowski (Narodowy Bank Polski, Poland), Tomasz Gromek (Narodowy Bank Polski, Poland), and Paweł Pisany (Narodowy Bank Polski, Poland & Polish Academy of Sciences, Poland)
Copyright: © 2021
|Pages: 25
DOI: 10.4018/978-1-7998-4390-0.ch009
Abstract
Technological advances in data transmission and processing are an important structural factor influencing the banking sector. As they have an important impact on the cost base of banks and are characterized by large one-off costs, it is argued that investments in digital technologies enhance the positive returns to scale in the banking system. This in turn further improves the competitive position of the largest market players, creating a positive feedback loop. In the longer run, this leads to a polarization of the banking sector, between large universal banks and small specialized banks. These processes are important from the point of view of macroprudential policy, notably in the dimension of reducing the risks connected with the emergence of “too big to fail” institutions. The chapter illustrates these issues using the results of a survey on the investments of banks in digital transformation in Poland, focusing on the relationships between market structure, financial position, and investments in digital technologies.