According to DataM Intelligence, the global Explainable AI Market reached US$ 5.2 billion in 2023 and is expected to reach US$ 22.1 billion by 2031, growing at a CAGR of 20.2% during the forecast period 2024-2031.

Services dominate the market due to growing adoption in the finance sector for transparent decision-making and regulatory compliance, while North America is the largest region, thanks to a well-established tech ecosystem and government initiatives like those from the U.S. Defense Advanced Research Projects Agency. The Asia-Pacific region is emerging as the fastest-growing market, driven by rapid digital transformation and increasing AI adoption in industries like healthcare and manufacturing. The global explainable AI market is experiencing strong growth, fueled by rising demands for transparency in AI models amid low trust levels (only 28% of citizens trust AI systems) and regulatory pushes in the EU and U.S. for interpretable outcomes. Explainable AI enhances accountability in applications like risk management and fraud detection, bridging the gap between complex AI and human understanding.

𝗚𝗲𝘁 𝗮 𝗦𝗮𝗺𝗽𝗹𝗲 𝗣𝗗𝗙 𝗕𝗿𝗼𝗰𝗵𝘂𝗿𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗥𝗲𝗽𝗼𝗿𝘁 (𝗨𝘀𝗲 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗘𝗺𝗮𝗶𝗹 𝗜𝗗 𝗳𝗼𝗿 𝗮 𝗤𝘂𝗶𝗰𝗸 𝗥𝗲𝘀𝗽𝗼𝗻𝘀𝗲): 

https://www.datamintelligence.com/download-sample/explainable-ai-market?sindhuri

Market Segmentation

Based on the DataM Intelligence report, the explainable AI market is segmented as follows:

By Offering:

Solution

Services

By Deployment:

Cloud

On-premises

By Organization Size:

Small and Medium-sized Enterprises

Large Enterprises

By Technology:

Machine Learning (ML)

Natural Language Processing (NLP)

Computer Vision

Big Data Analytics

Others

By Application:

Fraud and Anomaly Detection

Drug Discovery and Diagnostics

Predictive Maintenance

Supply Chain Management

Identity and Access Management

Others

By End-User:

Healthcare

BFSI

Aerospace and Defense

Retail and E-commerce

Public Sector and Utilities

IT and Telecommunication

Automotive

Others

Market Share

Regionally, North America holds the largest market share in the global explainable AI market, driven by collaborations between academic institutions, startups, and corporations, along with strong adoption in finance for tasks like credit scoring and portfolio optimization.

The Asia-Pacific region is expected to register the fastest growth, supported by Industry 4.0 advancements and increasing regulatory focus on AI transparency in emerging economies.

Market Drivers

· Growing adoption of explainable AI for risk management in sectors like banking, healthcare, and cybersecurity, providing justifications for AI decisions to build stakeholder trust and ensure regulatory compliance.

· Rapid expansion of Industry 4.0, integrating AI, IoT, and big data, where explainable AI addresses needs for transparency, accountability, and productivity gains (e.g., 32% of companies expect over 10% profit increase).

· Rising regulatory demands in the EU and U.S. for interpretable AI, alongside initiatives like conferences on fairness and interpretability in medical imaging.

· Increasing product launches and partnerships, such as those embedding AI in financial services to enhance efficiency and bias detection.

· Demand for bias reduction and error correction in AI models, improving fairness and precision in high-stakes applications.

Market Challenges

· Complexity of AI models requiring significant resources like data scientists and computational power, leading to high development costs and long training times that deter smaller organizations.

· Scalability issues in real-world deployment, as intricate models struggle with large data volumes and may lack efficiency.

· Decreased interpretability with growing model complexity, hindering adoption in regulated sectors like healthcare and finance due to ethical and compliance concerns.

· Trade-offs between performance, fairness, and robustness, limiting practical use across industries.

Key Players

The explainable AI market is competitive, with several major players actively innovating and expanding their product portfolios. Key market participants include Kyndi, Alphabet, Inc., IBM Corporation, Microsoft Corporation, Amelia US LLC, BuildGroup, DataRobot, Inc., Ditto AI Ltd, DarwinAI, and Factmata.

Recent Developments (2023):

On September 06, 2023, Temenos launched a Generative AI solution for banks to automatically classify transactions, delivering personalized insights and improving digital banking experiences.

On July 05, 2023, Fujitsu collaborated with Informa D&B to integrate explainable AI for financial-commercial information, enhancing decision-making transparency.

On December 30, 2022, Digité, Inc. launched RISHI-XAI, the world's first explainable AI product for enterprise project intelligence, combining ML and domain expertise for decision-makers.

On December 07, 2022, Deutsche Bank partnered with NVIDIA to embed AI in financial services, accelerating risk management and operational efficiency using NVIDIA AI Enterprise software.

In June 2023, Siemens announced a EUR 2 billion investment in new manufacturing facilities, R&D labs, and training centers to support Industry 4.0 growth and innovation.

Conclusion

The explainable AI market is poised for substantial growth, driven by regulatory pressures, Industry 4.0 integration, and the need for trustworthy AI in risk-sensitive sectors. North America leads in ecosystem strength and adoption, while Asia-Pacific offers the highest expansion potential, creating opportunities for players to advance transparency in applications like fraud detection and predictive maintenance. As AI complexity rises, explainable solutions will be key to balancing performance with ethical compliance, fostering broader global trust and utilization.

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