Morgan Stanley: The domestic banks has incorporated AI into their core infrastructure, which helps maintain ROE and enhance corporate competitiveness.

Morgan Stanley released a research report stating that various banks in China have deployed AI on a large scale in front, middle, and back-office positions. They are currently building enterprise AI platforms, internal knowledge bases, digital assistants, and workflow tools, indicating that AI has entered a stage of large-scale implementation and has become a part of core banking infrastructure. The bank believes that AI is assisting banks in improving efficiency, reducing manual workloads, and strengthening risk monitoring. This will help Chinese banks to expand their services to more enterprises and retail customers without increasing their workforce, while offsetting the pressure brought by the low-interest-rate environment in recent years. Additionally, AI can also help banks accurately meet the financing needs of the real economy, ultimately enhancing the overall competitiveness of Chinese enterprises while maintaining a stable return on equity (ROE). The bank pointed out that the four major state-owned banks had massive AI expenditures last year, with each bank's IT investment exceeding 25 billion RMB, accounting for around 3% to 4% of their total revenue. However, the bank believes that banks that can transform AI investments into widespread internal applications and workflow changes will stand out. Currently, Industrial and Commercial Bank of China, China Construction Bank Corporation, and China Merchants Bank are industry leaders, combining strong technological capabilities with powerful execution.