Artificial Intelligence

European Spending On Artificial Intelligence to Reach USD 21 Bln By 2023

With technological developments speeding up European spend on artificial intelligence (AI) is estimated to reach more than USD 7 billion in 2019 and to almost triple over the next four years. CAGR will grow to a 32 percent, to reach over USD 21 billion in 2023.

European Spending On Artificial Intelligence to Reach USD 21 Bln By 2023

According to IDC, banking, retail, and discrete manufacturing will be the industries with the highest spend in AI systems by 2023, absorbing 39 percent of spend. Healthcare remains an attractive market for AI and, although many hospitals are piloting projects and have not started full implementation, increasing investments in AI-enabled diagnosis and treatment systems will support fast growth in spending, which will accelerate at a 38 percent five-year CAGR across the health sector.

Investments in AI are largely fueled by increasing efforts around customer experience and digital transformation, as companies are focusing on providing empathy at scale while using intelligent approaches to scale production and processes and “allocate attention” among employees. Product recommendation is expected to be one of the three fastest-growing use cases through 2023, showing that European companies have acknowledged the importance of embedding customer centricity and AI into their business models.

 More than half of the spend on AI by 2023 will be driven by the UK, Germany, and France

The new IDC data estimates that more than half of the spend on AI by 2023 will be driven by the UK, Germany, and France, while almost a third of the same spend will be driven by the rest of Western Europe (including Austria, Belgium, Denmark, Finland, Greece, Ireland, the Netherlands, Norway, Portugal, Sweden, and Switzerland). Italy and Spain only account for a small portion of the total spend. The UK, Germany, and France have AI-focused start-up hubs in London, Berlin, and Paris, and will account for a large proportion of future investments, especially in fintech, health tech, and marketing and advertising. These countries also have large AI investors that provide incentives and accelerated growth for start-ups and bigger tech companies hoping to digitally transform and disrupt the market using AI.

Even if Central and Eastern Europe (CEE) has a relatively small market share in terms of AI spending within Europe as a whole (6.5 percent in 2018), organizations are increasingly adopting AI as it becomes a key part of their digital transformation. The biggest spenders for AI systems are banking and manufacturing. The main AI projects in finance involve automation of customer service, fraud protection, and optimization of processes. Improving production and quality control and performing preventative maintenance are driving AI investments in manufacturing in CEE.

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