4th Edition - GenAI insights for Banking COOs

Welcome to the latest edition of GenAI for Banking COOs. As always, we continue to be spoilt for choice on what makes the cut for this newsletter and what gets deferred. In today’s newsletter, we cover:

• Busy week for the regulators on AI especially Europe’s AI Act
• Lessons learnt from GenAI deployment at Ally Financial
• OpenAI’s GPTs - overshadowed but not forgotten
• Choosing (or not) between the various LLMs and more

Busy week for the regulators on AI especially Europe’s AI Act

You have to admire the Europeans from always leading from the front when it comes to protecting individuals and perhaps society (remember GDPR anyone) from the harmful impact of technology. Case in point is the announcement of Europe’s AI Act last weekend.

While the act spans multiple industries, there are material implications for banking. The most relevant (though not surprising) is the expectation of transparency and traceability when it comes to high risk AI systems. The official press release especially called out banking and insurance sectors on this. EU citizens would have the right to launch complaints and receive explanations about decisions made by these systems if those decisions impact their rights. Non-compliance across the broader rule set could lead to fines ranging from 1.5% to 7% of global turnover. That should make all of us sit up and take this very seriously.

Meanwhile, in the US, the Financial Stability Oversight Council also released its annual report this week. There is an entire section dedicated to the risks of Artificial Intelligence in Financial Services including Generative AI. The usual expected risks are there including biases, lack of transparency in decision making and cybersecurity vulnerabilities. Hallucinations by GenAI also get a shout out. The council recommends that oversight structures for AI need to be strengthened and all stakeholders need to further build expertise and capacity to monitor AI innovation, usage and identify emerging risks. This gives another reason to double down on the partnership between the COO, CRO and CIO to refine and strengthen the design and execution of AI risk management practices across the bank.

By the way, as an aside, we strongly recommend reading the full FSOC report to all banking leaders and practitioners for general awareness about this fascinating year in US financial services. From the commercial real estate portfolio developments to billion dollar climate events to the spring 2023 turmoil (was it really just earlier this year), it is a dense but fascinating read.

Lessons learnt from GenAI deployment at Ally Financial

We found Steve Cocheo’s write-up in The Financial Brand on Ally’s GenAI experiments fascinating. If you have not read it yet, please do. No summary can do justice to the excellent insights and perspectives shared in the article. Steve covers a range of topics including the partnership between Andrea Brimmer (Chief Marketing Officer at Ally) and Sathish Muthukrishnan (CIO at Ally) in using OpenAI’s ChatGPT in driving Marketing impact. Early results indicate up to 34% time save especially on research, first drafts etc. They also had an 81% prompt accuracy rate implying 4 out of 5 people received the right insights. Other things that stood out for us included the 185 use-cases repository that Ally has built, the technology flexibility and the strong partnership with risk and compliance. On the technology front, while the initial experimentation has been with OpenAI, Ally is also exploring Amazon Bedrock software (LLM managed service) and even Google Bard may be on the table. Looks like Ally is using a switchboard architecture (more on that below) that allows new LLMs and tech to be swapped in and out as technology evolves. ?Given the ‘regulatory’ start of this edition of the newsletter, it was great to see that Ally was able to proactively fast track the risk, compliance and legal reviews to allow this experimentation when such reviews typically took them six to eight months. Kudos to Ally and big thank you to Steve Cocheo and The Financial Brand for bringing this to all of us.

OpenAI’s GPTs - overshadowed but not forgotten

Admit it. We all were glued to the OpenAI CEO drama as it happened, our very own tabloid fodder. However, what got lost in that furore was a very interesting announcement by OpenAI about GPTs during their DevDay just prior to that saga. ?GPTs allow us to create custom versions of the underlying GPT model so that prompt engineering does not need to be repetitive to start narrowing down the LLM for a specific business context. This allows for quite a few interesting possibilities in universal banks. Would this lead to a wave of ?internal baby GPTs such as a Retail Bank GPT, an Operations GPT, a Commercial Lending GPT, a Payments GPT and so on so forth? We are very curious to see how this gets adopted in the real world. Stay tuned, more to come.

Choosing (or not) between the various LLMs and more

Meanwhile at Accenture, the $3bn we are spending on GenAI continues to bear fruits. We already have over 1,450 pending and issued patents in AI. Building on these insights, our Center for Advanced AI has developed and launched a set of foundation model services including a Gen AI model “switchboard” that allows companies in assessing and choosing between different LLM models based on cost, prompt response accuracy etc. The services also bring together techniques to customize LLMs for specific business context etc. Lastly, the team has also developed a comprehensive training and certification program. COOs and CIOs should find this especially interesting as they think about scaling out the use of GenAI across the enterprise and building internal talent in this space.

We hope this edition again gave you some good food for thought. Exciting times lie ahead, and we're committed to delivering ongoing insights and partnering with you as we navigate this intriguing journey together. Stay tuned for more updates in the next edition. Until then!

?#GenerativeAI #COO #Banking #Operations #Innovation #ArtificialIntelligence #CapitalMarkets #LLMs

?

This issue of the newsletter is brought to you by Accenture’s Rajat Dev | Nazat Dowla, MBA / MPP | George Heathcote | Ian Jacobs

?