Banking GenAI #11 - Insights for COOs

Welcome to the latest edition of GenAI for Banking COOs. In today’s newsletter, we cover examples of how Banking (e.g. State Street) and Big Tech providers (Microsoft and Meta) continue to embed GenAI in their platforms and a comparative view (2024 v. 2023) of AI evolution as per the latest Standford AI index:

• GenAI at State Street; How One of the US Largest Banks Is Implementing Generative AI
• Meta’s Strategy for Implementing Consumer-Facing Generative AI
• Microsoft Launches Co-Pilot For Finance function
• Stanford’s Yearly AI Index: a 2023 v. 2024 comparative view

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GenAI at State Street; How One of the US Largest Banks Is Implementing Generative AI

We are big fans of the folks over at Venturebeat, who are always publishing some very cool content. This time, they had Caroline Arnold, Executive Vice President at State Street, share the bank’s GenAI experience at their AI Impact Tour event in Boston. State Street is bringing several Generative AI applications to market in a push to empower investors to better interact with their investment data and to optimize internal operations. For one, they are integrating a Generative AI interface into their central data platform, Alpha, to allow for natural language queries on investment holdings. Additionally, State Street has added a GenAI chatbot named Arnold to its research site, which they state will answer questions more efficiently than their current help desk. State Street has said that these applications are nearing public release, indicating the quick development and power of GenAI for consumer facing applications.

Interestingly, as State Street continues to develop the technology and improve their operational efficiency, they have stated that they expect the demand for GenAI at banks to become "overwhelming".

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Meta’s Strategy for Implementing Consumer-Facing Generative AI?

Meta, the parent company of various social media platforms, has taken the initiative to enhance the user experience of its platforms by inserting its generative AI – known as “Llama.” In an ambitious endeavor, the company is “testing more than 20 new ways generative AI can improve your experiences across Facebook, Instagram, Messenger, and WhatsApp –spanning search, social discovery, ads, business messaging and more”. The move to massively test Llama in a seemingly forceful manner marks a pivotal moment step in mainstream AI-driven interactions.?We will talk more about Google’s similar announcement to embed Generative AI into their core search product in the following newsletter.

As Meta introduces Llama into its platforms, it anticipates a diverse range of reactions from users. While a set of users may welcome and embrace the integration of Generative AI alongside their text boxes or image editing tools, some have expressed reservations or annoyance regarding the prominent presence of the AI features –a subset of these users is actively seeking ways to remove or minimize the newly implemented features. Although this reaction underscores the importance of user-centric design and the necessity to balance innovation with user preferences, the innovations to the user experience cannot be ignored.?

Observing the outcome of this broad deployment and closely monitoring consumer feedback will provide invaluable insights into the public’s acceptance of Generative AI. Perhaps this will become a reason behind Generative AI becoming part of a person’s day-to-day behavior.?

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Microsoft Launches Co-Pilot For Finance Function

Microsoft has announced Microsoft CoPilot for Finance that accelerates time-to-impact for finance professionals by seamlessly connecting productivity tools such as Excel and Outlook with existing financial systems to support critical business processes and generate insights and actions in real time. It is not surprising to see this as one of the early domain-specific launches as we are all aware of the countless excels and macros that are in use by our Finance colleagues across the globe.

According to Microsoft, Copilot for Finance allows users to connect to existing financial data sources, including ERP, and more using prebuilt connectors and Microsoft Copilot Studio. Transactions can be reviewed across systems for anomalies, risks, and unmatched data. It supports intelligent prompts when financial data structures are compared, automated reconciliation report creation, and automatically generated insights and suggestions for possible ways to address discrepancies. The reconciliation report summary and documented action items can be saved for future reference and auditing purposes. Copilot also helps streamline variance analysis and save time with accurate commentary and insights sourced from various data records.

Interestingly, in Outlook, it?supports the collections process. Users can connect to Microsoft Dynamics 365 Finance directly from Outlook for easy access to valuable insights from customer data in the ERP system, get help when they craft email responses, and save communication summaries and action items.

We are looking forward to seeing how this tool gets adopted in the industry. A lot will depend on how easily it plugs into bank’s existing systems and is able to overlay on top of the complex GL structure that most banks have.

Copilot for Finance Link: Microsoft Copilot for Finance | AI-Driven Finance Operations

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Stanford’s Yearly AI Index: a 2023 v. 2024 comparative view

Stanford’s Yearly AI Index is out. It underscores the impact that AI (including generative AI) is generating in the real world. According to surveyed organization, 42% report cost reductions and 59% report revenue increases from implementing AI into their day-to-day. The transformative impact has enabled workers to complete tasks more quickly and enhanced the quality of their work –it even helps bridge the gap between low- and high-skilled workers. Nonetheless, caution is warranted in the use of AI without proper oversight.

A comparative analysis between the 2024 and 2023 index also reveals notable trends. Generative AI investment is witnessing a surge, contrasting with the decline in private investments in AI for the second consecutive year. The prominence of AI is evident, given how it was mentioned in 394 earnings calls, around 80% of Fortune 500 companies –a notable increase from last year’s 266 mentions – indicating the increasing importance of AI across industries. This is further evidenced by the amount of frontier AI research being generated by Industry rather than Academia. This trend is reflected in the growing demand for AI-related professional skills, supporting the increase in related degree programs. Moreover, the preference for AI PhDs to work within Industry continues to outweigh Academia based roles, highlighting Industry’s pivotal role in shaping AI talent.

However, enterprises must adapt to the evolving AI regulatory landscape to ensure compliance with emerging regulations. The number of AI-related regulations in the U.S. has surged in recent years. In 2023, there were 25 such regulations, marking a substantial increase from just one in 2016 –last year saw a notable growth of 56.3% in the total number of AI-related regulations. The primary AI risks for several global companies include privacy, security, and reliability of said tools. As companies scale AI, focus and reporting on Responsible AI is also increasing. However, despite this trend, robust standardized evaluations are notably absent. Recent research has shed light on the absence of uniformity in responsible AI reporting. Major players in the AI sphere like OpenAI, Google, and Anthropic mainly test their models against different responsible AI benchmarks. This practice complicates the efforts aimed at accurately comparing the risks and subtleties inherent in each AI model.

We suggest reading the Standford report further as it covers a lot of interesting ground. A big thank you to the good folks behind the report. We are curious what the 2025 version will bring – will it be a world full of fine-tuned models with every company having one if not many models for each of their domains?

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This glimpse into GenAI's impact on banking is just the beginning! We're as excited as you are about its potential. Stay tuned for upcoming editions packed with insights, industry intel, and practical tools to navigate the exciting future of GenAI in Banking together.

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#GenAI #COO #BankingOps #Innovation #ArtificialIntelligence #BankingTechnology #Banking #Operations #Transformation

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This issue of the newsletter is brought to you by Accenture’s Rajat Dev | Nazat Dowla | Francesco Erriquez | Dhruv Laroia | George Heathcote | Sebastian Cadillo | Alfonso Berguido | Anjana Deepu | Ashley Iu