Explainable AI Market

Global Explainable AI Market:

The global explainable AI market size reached US$ 6.3 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 24.9 Billion by 2032, exhibiting a growth rate (CAGR) of 16.51% during 2024-2032. The rising demand for transparency in AI decisions by businesses to adopt solutions that provide clear explanations is stimulating the market growth.

Explainable AI Market Analysis:

• Major Market Drivers: The increasing regulations requiring companies to implement systems that explain AI outcomes are propelling the market.
• Key Market Trends: The growing use of AI in critical sectors like healthcare and finance is positively impacting the market growth.
• Competitive Landscape: Some of the major market companies include DarwinAI, DataRobot Inc., Google LLC (Alphabet Inc.), International Business Machines Corporation, Kyndi Inc., SAS Institute Inc., and Seldon Technologies Limited, among many others.
• Geographical Trends: North America exhibits the largest market for explainable AI. Advanced technological infrastructure, strong investment in AI research, and a growing focus on ethical AI implementation across industries, are augmenting the market in North America.
• Challenges and Opportunities: The trade-off between model interpretability and complexity is hindering the market. However, developing hybrid models that balance accuracy and transparency while incorporating user-friendly visualization tools for a better understanding will continue to strengthen the market over the forecasted period.
   

Explainable AI Market Trends:

Enhanced Transparency Builds Trust in AI

Explainable AI fosters a deeper understanding of AI models by providing insights into their decision-making processes. In contrast, this transparency allows users to grasp how outcomes are derived, which builds trust and confidence in the technology, thereby leading to greater acceptance and utilization across industries. For instance, in February 2024, Ericsson launched Explainable AI (XAI) within its Cognitive Software portfolio, enhancing network optimization for communication service providers. The solution offers full explainability, rapid deployment using diverse global data sets, and an intuitive interface, thereby addressing transparency and trust issues in AI adoption.

Regulatory Compliance Drives AI Adoption

As governments and regulatory bodies implement stricter guidelines regarding AI usage, organizations must ensure their systems align with these regulations. Moreover, explainable AI offers the necessary insights into decision-making. Thus, helping organizations to maintain compliance and avoid potential legal challenges, thereby encouraging broader adoption of AI solutions. For instance, in May 2024, Temenos launched Responsible Generative AI solutions integrated with its Core Banking platform, enhancing efficiency and data management. The patented Explainable AI capabilities ensure transparency and security, allowing banks to deploy AI safely while generating insights and reports through natural language queries.

Proactive Decision-Making Improves Operational Efficiency

Organizations can gain valuable insights that allow them to anticipate issues and opportunities with explainable AI. Furthermore, this proactive approach enables businesses to make informed decisions quickly, streamline processes, and optimize resource allocation, ultimately enhancing overall operational efficiency and effectiveness in their strategic initiatives. For instance, in September 2024, Qlik enhanced its AutoML capabilities with significant updates focusing on explainable AI, ensuring model transparency and trust. These advancements empower businesses to shift to proactive decision-making by understanding AI predictions, thereby fostering confidence in data-driven strategies for improved business outcomes.

Global Explainable AI Industry Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the market, along with the explainable AI market forecast at the global, regional, and country levels for 2024-2032. Our report has categorized the market based on component, deployment, application, and end use.

Breakup by Component:

• Solution
• Services
   

Solution currently holds the largest explainable AI market demand

The report has provided a detailed breakup and analysis of the market based on the component. This includes solution and services. According to the report, solution represented the largest market segmentation.

Explainable AI (XAI) solutions aim to make AI models more transparent by providing insights into their decision-making processes. For example, Google’s TCAV tool helps understand how deep learning models prioritize features.

Breakup by Deployment:

• Cloud
• On-premises
   

On-premises represent the largest segment

The report has provided a detailed breakup and analysis of the market based on the deployment. This includes cloud and on-premises. According to the report, on-premises represented the largest market segmentation.

According to the explainable AI market outlook, on-premises deployment of explainable AI ensures data privacy and control, as models are hosted within an organization’s infrastructure. For example, IBM’s AI OpenScale platform launched with on-premise options, thereby offering transparency and insights into AI decision-making processes.

Breakup by Application:

• Fraud and Anomaly Detection
• Drug Discovery and Diagnostics
• Predictive Maintenance
• Supply Chain Management
• Identity and Access Management
• Others
   

Fraud and anomaly detection dominates the explainable AI market statistics

The report has provided a detailed breakup and analysis of the market based on the application. This includes fraud and anomaly detection, drug discovery and diagnostics, predictive maintenance, supply chain management, identity and access management, and others. According to the report, fraud and anomaly detection represented the largest market segmentation.

Explainable AI in fraud and anomaly detection enhances transparency by showing how decisions are made. For example, Mastercard’s AI models like IBM's AI OpenScale detect unusual transaction patterns while providing reasons for alerts, thereby improving trust.

Breakup by End Use:

• Healthcare
• BFSI
• Aerospace and Defense
• Retail and E-commerce
• Public Sector and Utilities
• IT and Telecommunication
• Automotive
• Others
   

IT and telecommunication currently hold the largest explainable AI market revenue

The report has provided a detailed breakup and analysis of the market based on the end use. This includes healthcare, BFSI, aerospace and defense, retail and e-commerce, public sector and utilities, IT and telecommunication, automotive, and others. According to the report, IT and telecommunication represented the largest market segmentation.

Explainable AI in IT and telecommunications is gaining traction and improving transparency in network management and customer service automation. For instance, Nokia launched its Explainable AI-powered solution to enhance network diagnostics, optimizing decision-making processes and user experience.

Breakup by Region:

• North America
  • United States
  • Canada
• Europe
  • Germany
  • France
  • United Kingdom
  • Italy
  • Spain
  • Russia
  • Others
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Australia
  • Indonesia
  • Others
• Latin America
  • Brazil
  • Mexico
  • Others
• Middle East and Africa
   

North America currently dominates the market

The market research report has also provided a comprehensive analysis of all the major regional markets, which include North America (the United States and Canada), Europe (Germany, France, the United Kingdom, Italy, Spain, Russia, and others), Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, and others), Latin America (Brazil, Mexico and others), and the Middle East and Africa. According to the report, North America accounted for the largest market share. 

According to the explainable AI market overview, North America exhibits a clear dominance in the market due to strong investment in advanced technologies, a robust AI ecosystem, and increased regulatory demands for transparency. Furthermore, tech companies and research institutions driving innovation. For instance, Google's "What-If Tool" allows users to visualize model decisions, making AI outputs more transparent. In contrast, IBM launched AI OpenScale, enhancing trust in AI models by explaining decision-making processes. The region's focus on AI regulations and ethical standards further strengthens its dominance in explainable AI development and adoption.

Competitive Landscape:

The explainable AI market research report has provided a comprehensive analysis of the competitive landscape. Detailed profiles of all major market companies have also been provided. Some of the key players in the market include:

• DarwinAI
• DataRobot Inc.
• Google LLC (Alphabet Inc.)
• International Business Machines Corporation
• Kyndi Inc.
• SAS Institute Inc.
• Seldon Technologies Limited
   

(Please note that this is only a partial list of the key players, and the complete list is provided in the report.)

 Explainable AI Market Recent Developments:

• September 2024: Qlik enhanced its AutoML capabilities with significant updates focusing on explainable AI, ensuring model transparency and trust.
• July 2024: ActiveFence launched AI Explainability as part of its ActiveScore models, enhancing transparency in content moderation, which break down AI decision-making, enabling moderators to understand content classifications, and improve compliance with regulations like the EU's Digital Services Act.
• May 2024: Temenos introduced Responsible Generative AI solutions integrated with its Core Banking platform, thereby enhancing efficiency and data management. The patented Explainable AI capabilities ensure transparency and security, allowing banks to deploy AI safely while generating insights and reports through natural language queries.

Explainable AI Market Report Scope:

Key Questions Answered in This Report:

• How has the global explainable AI market performed so far, and how will it perform in the coming years?
• What are the drivers, restraints, and opportunities in the global explainable AI market?
• What is the impact of each driver, restraint, and opportunity on the global explainable AI market growth?
• What are the key regional markets?
• Which countries represent the most attractive explainable AI market?
• What is the breakup of the market based on the component?
• Which is the most attractive component in the explainable AI market?
• What is the breakup of the market based on the deployment?
• Which is the most attractive deployment in the explainable AI market?
• What is the breakup of the market based on the application?
• Which is the most attractive application in the explainable AI market?
• What is the breakup of the market based on the end use?
• Which is the most attractive end use in the explainable AI market?
• What is the competitive structure of the global explainable AI market?
• Who are the key players/companies in the global explainable AI market?

Key Benefits for Stakeholders:

• IMARC's industry report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the explainable AI market from 2018-2032.
• The research report provides the latest information on the market drivers, challenges, and opportunities in the global explainable AI market.
• The study maps the leading, as well as the fastest-growing, regional markets. It further enables stakeholders to identify the key country-level markets within each region.
• Porter's five forces analysis assists stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the explainable AI industry and its attractiveness.
• The competitive landscape allows stakeholders to understand their competitive environment and provides insight into the current positions of key players in the market.