Explainable AI Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

Explainable AI Market Analysis

The Explainable AI Market size is estimated at USD 8.63 billion in 2024, and is expected to reach USD 21.19 billion by 2029, growing at a CAGR of 19.69% during the forecast period (2024-2029).

• Explainable AI refers to the growth of artificial intelligence (AI) systems that can provide coherent and transparent explanations for their decision-making processes. AI models have achieved unparalleled performance in various domains. Explainable AI seeks to enhance trust, responsibility, and interpretability in AI systems. It is closely tied to more general growth and advancements in technology. As technology continues to evolve and enhance, explainable AI allows for the development and execution of more refined and transparent AI systems.
• The advancements in digital transformation and progressive technologies, often referred to as Industry 4.0, are a driving trend behind the demand for explainable AI (XAI). This development has led to the successful adaptation of diverse industries by embracing digital technologies. Integrating XAI methods with Industry 4.0 technologies allows precise and high-quality applications, making firms more agile and customer-focused. Industry 4.0 leverages Al for predictive maintenance and fault detection, lowering unplanned downtime. With XAI, operators can understand the reason behind Al's predictions and recommendations. This transparency is crucial for maintenance personnel, permitting them to make informed findings about when and how to conduct maintenance activities.
• The global explainable AI market is growing due to the rising regulatory and compliance requirements in various industries, such as finance, retail, and healthcare, to provide fairness, responsibility, and ethical use. Nations and regulatory bodies have recognized the significance of transparency and accountability in AI systems to assure ethical service and prevent biases or prejudiced outcomes. As a result, the preface of the General Data Protection Regulation (GDPR) in Europe and different guidelines from organizations, such as the Financial Stability Board (FSB), underline the need for explainability in AI algorithms, thus creating a promising outlook for the market. Moreover, a growing number of firms are adopting explainable AI solutions in adherence with these regulations and guidelines to provide transparent and interpretable AI systems, which, in turn, is positively influencing the market growth.
• Fraud detection is a primary application area of explainable AI where it predicts fraudulent attacks and determines which attack has a more elevated threat. Cybersecurity is an increasing concern for companies and governments. Vendors of cybersecurity solutions are increasingly utilizing AI and explaining an AI algorithm's findings brings several benefits, including greater confidence in the system and a better understanding of its operation. Explainable AI solutions are being used in several areas of cybersecurity, enhancing the market growth. XAI consulting services specialize in assisting institutions adopt and implement AI solutions that are transparent, interpretable, and accountable.
• Cloud-based solutions are an essential component of the present digital environment. The expanding trend of multi-cloud operation, as well as the growing need for cloud-based intelligence services, drives the demand in the market under study. The latest XAI technologies add unique and increased value to cloud computing. This aspect not only improves overall process viability but is also necessary for incorporating new technology. Explainable AI software can also help bridge the gap between cloud computing and modern breakthroughs. It also assists in satisfying the needs of new enterprises and startups.
• On the contrary, the costs of business consulting, research and development, computing power, and cost to build minimal viable products are incurred before implementation. Factors such as automatic data preparation, delivering the infrastructure, processing, and making it actionable for systems and employees constitute the total cost for performance. The implementation cost is high and depends on the size of the industry. A significant challenge in the market is replacing the human workforce with AI. AI technology is the next step in maximum productivity, replacing individual craftsmanship with the factory production line.

Explainable AI Market Trends

BFSI Segment is Expected to Hold Significant Share of the Market

Explainable AI Industry Segmentation

XAI is a collection of processes, tools, and methods that authorize human users to understand and trust the output produced by machine learning algorithms. It describes an AI model, its expected impact, and potential biases. Its benefits characterize model accuracy, fairness, transparency, and outcomes in AI-powered decision-making. Explainable AI is necessary for an organization to build trust and confidence when placing AI models into production. AI also enables an organization to adopt a responsible path to AI development.

The explainable AI market is segmented by offering (solutions and services), deployment (cloud and on-premise), end-user industry (BFSI, healthcare, manufacturing, retail, IT and telecommunication, and other end-user industries), and geography (North America, Europe, Asia-Pacific, Latin America, and Middle East and Africa). The report offers market size and forecasts in value (USD) for all the above segments.