Explainable AI Market Size (2023 - 2030)

The Global Explainable AI Market was valued at USD 6.42 billion and is projected to reach a market size of USD 21.07 billion by the end of 2030. Over the forecast period of 2024-2030, the market is projected to grow at a CAGR of 18.5%. 

Explainable Artificial Intelligence, or simply XAI, is a blend of procedures and techniques permitting human users to understand and have confidence in the outcomes generated by machine learning (ML) algorithms. This technology appraises the preciseness and fairness, as well as the openness of AI models. It also assesses its probable influence on AI-driven decision-making. With this, AI models become more comprehensible, and users become well-versed with any ramifications or potential biases. Explainable AI is vital for organizations since it cultivates credence and confidence when deploying AI models in real-world applications. Furthermore, it encourages a responsible approach to AI development, thereby fostering ethical and accountable AI practices. Explainable AI enables an enterprise to debug and optimize model performance while ensuring stakeholders fathom how AI models work. Evaluating model behaviors via monitoring their deployment status, fairness, quality, and drift is vital for successfully implementing AI on a larger scale. Regular appraisal of the AI model permits a business to contrast predictions, assess model risk, and enhance its performance. Demonstrating both positive and negative aspects of model behaviors along with the underlying data utilized to generate explanations expedites the evaluation procedure. Additionally, a data and AI platform can provide feature attributions for model predictions, empowering teams to visually explore model behavior via interactive charts and exportable documents.

Global Explainable AI Market Drivers:

The growing requirement for XAI in the healthcare sector is fueling the growth of the Global Explainable AI Market.

AI's potential advantages in the healthcare domain are substantial, but the risks linked to an untrustworthy AI system are far more significant. Naturally, the decisions made by AI models to assist clinicians categorize serious diseases based on structured criteria or unstructured data like medical imaging have a wide-ranging impact. In contrast to a system that predicts and permits the clinicians to devote an equivalent amount of time (irrespective of AI decisions) to determining whether the AI system's decision is average and dependable, an AI system that predicts and, simultaneously, clarifies the reasons for its conclusion, will be much more valuable. Because lives are on the line in healthcare, Explainable AI is extremely relevant. Therefore, this factor propels the demand for Explainable AI.

The increasing demand for XAI in autonomous vehicle applications is another factor contributing to the growth of the Global Explainable AI Market.

Autonomous driving is a continuously advancing notion and possesses the potential to revolutionize the automobile industry in the not-too-distant future. Driverless or self-driving automobiles are enthralling as long as no mistakes are committed. In this high-stakes AI application, one erroneous action can cost multiple lives. Explainability is essential for comprehending the system's capabilities and constraints before deployment. It's vital to apprehend the limitations of driving assistance (or auto-pilot) when utilized by consumers so that the causes of these constraints can be evaluated, clarified, and corrected on priority. Assistive parking and voice assistants are appealing features that, to a great extent, represent the model's safer and less risky decisions. However, in other scenarios, such as with braking assistance or full self-driving, Explainable AI becomes crucial for identifying any biases and resolving them. Therefore, this factor also propels the demand for Explainable AI.

Global Explainable AI Market Challenges:

The Global Explainable AI Market is encountering obstacles, primarily concerning data confidentiality and integrity. Beneficial insights regarding decision-making can be attained when appraising both public and private data. Yet, clarifying certain decisions may necessitate the utilization of sensitive data. Such data must be handled cautiously to safeguard it against loopholes and potential hacker intrusions. The privacy and security of an individual as well as a business firm can suffer substantially by haphazardly handling sensitive data. Subsequently, it becomes essential to set forth unambiguous guidelines and protocols about data management and security in Explainable AI systems. Thus, these hindrances curtail the progress of the Global Explainable AI Market.

Global Explainable AI Market Opportunities:

Government regulatory requirements are anticipated to significantly bolster the growth of the Global Explainable AI Market in the coming years. Governments and regulatory entities are slated to formulate policies that mandate transparency and interpretability in AI systems as they make ethical and responsible AI deployment a priority. These regulations may obligate business firms to elucidate and justify AI-based decisions, particularly in domains like BFSI, healthcare, and legal. As enterprises seek to comply with these regulations and ensure openness in their AI-driven decision-making, there will be an augmented demand for Explainable AI solutions. This demand, propelled by the need to meet regulatory obligations and demonstrate accountability, is envisaged to further fuel the growth of the Explainable AI industry in the future.

COVID-19 Impact on the Global Explainable AI Market:

The Global Explainable AI Market noted a positive boost in growth owing to the impact of the COVID-19 pandemic. With the augmented demand for AI solutions in healthcare, drug development, supply chain optimization, and remote monitoring owing to the pandemic, Explainable AI played a critical role in transparent decision-making to foster trust and ensure patient safety. Furthermore, the rise of remote work led business entities to seek AI solutions for automation and increased productivity, with a growing demand for explainable AI to comprehend AI-generated decisions during remote work scenarios.

Global Explainable AI Market Recent Developments:

• In June 2023, Dutch start-up Deeploy, a software platform focused on oversight, enabling machine learning model deployments with transparency and explainability, secured a EUR 2.5 million funding round, which will help expand the platform's services and ensure compliance with upcoming European AI regulations.

• In March 2023, GyanAI revealed its plans to introduce the world's inaugural language model and natural language understanding engine with explainable capabilities.

• In April 2020, Temenos unveiled its latest development: Explainable AI (XAI) models, empowering banks and credit unions to swiftly provide loans to SMEs that faced cash flow disruptions due to the COVID-19 outbreak.

EXPLAINABLE AI MARKET REPORT COVERAGE:

Global Explainable AI Market Segmentation: By Component

• Solutions

• Services

Based on the Component, the Solutions segment occupied the highest market share in the year 2022. The growth can be ascribed to the extensive adoption of AI technologies across various industries. The solutions segment presents a diverse array of tools, encompassing model interpretability, development, training, and performance monitoring, vital for constructing, deploying, and overseeing Explainable AI models. Notably, Explainable AI serves a crucial role in fraud detection, offering enlightening solutions to avert fraudulent activities. The Services segment is anticipated to expand at the quickest rate over the forecast period 2023-2030 owing to the increasing prominence of companies focused on explainable AI and offering consulting and advisory services to organizations striving to enhance the transparency and interpretability of their AI systems.

Global Explainable AI Market Segmentation: By Deployment

• Cloud-Based

• On-Premises

Based on the Deployment, the On-Premises segment occupied the highest market share in the year 2022. The growth can be ascribed to businesses employing diverse methods like rule-based systems, decision trees, and model-based explanations to develop Explainable AI on their premises. Prominent companies in domains like BFSI, retail, and government favor this approach owing to its security benefits. The system effectively utilizes ML to analyze extensive data, detect potential fraudulent activities, and offer transparent and trustworthy clarifications regarding its decisions.

Global Explainable AI Market Segmentation: By Application

• Drug Discovery & Diagnostics

• Fraud & Anomaly Detection

• Identity & Access Management

• Predictive Maintenance

• Supply Chain Management

• Others

Based on the Application, the Fraud and Anomaly Detection segment occupied the highest market share in the year 2022. The growth can be ascribed to the rising deployment of Explainable AI models for fraud and anomaly detection applications. In this field, ML algorithms are frequently combined with human expertise owing to their heavy reliance. Explainable AI models are crucial in fostering association between human analysts and AI systems by offering interpretable outcomes. Consequently, analysts are better able to recognize trends, attain valuable insights, and contribute their expertise, thus amplifying the overall detection capabilities.

Global Explainable AI Market Segmentation: By Industry Vertical

• Aerospace & Defense

• Automotive

• Banking, Financial Services, & Insurance (BFSI)

• Healthcare

• IT & Telecommunications

• Public Sector & Utilities

• Retail & E-commerce

• Others

Based on the Industry Vertical, the IT & Telecommunications segment occupied the highest market share in the year 2022. The growth can be ascribed to the generation of significant and beneficial data from varied sources, which plays a vital role in training AI models. By embracing Explainable AI solutions, the IT & Telecommunications industry can make the most of their data, leading to actionable insights. Furthermore, the augmenting demand for consumer interactions and network logs in the IT & Telecommunications sector further contributes to the growth of this segment.

Global Explainable AI Market Segmentation: By Region

• North America

• Europe

• Asia-Pacific

• South America

• Middle East & Africa

Based on the Region, Asia-Pacific occupied the highest share of the Global Explainable AI Market in the year 2022. The growth can be ascribed to the swift adoption of technology, the presence of extensive IT infrastructure, and the willingness of diverse industries and end-users to embrace avant-garde technologies for operational solutions and services. Furthermore, the region houses several prominent market players, encompassing Fiddler Labs, Inc., Kyndi, Inc., ZestFinance Inc., OpenAI Inc., and Intel Corporation.

The region of Asia-Pacific is anticipated to expand at the quickest rate over the forecast period 2023-2030 owing to strong economies, emerging technology hubs, increasing adoption of generative services, and the presence of key players driving technological advancements.

Global Explainable AI Market Key Players:

1. Google LLC (United States)

2. IBM Corporation (United States)

3. Fiddler Labs, Inc. (United States)

4. Microsoft Corporation (United States)

5. Kyndi, Inc. (United States)

6. Intel Corporation (United States)

7. ZestFinance Inc. (United States)

8. Hawk AI GmbH (Germany)

9. OpenAI Inc. (United States)

10. Salesforce, Inc. (United States)