Banking GenAI #6 - Insights for COOs

Welcome to the latest edition of GenAI for Banking COOs. As we step into 2024, the world of GenAI continues to buzz with anticipation at the achievements to come. The past year witnessed remarkable advancements, blurring the lines between human and machine creativity, and has us extremely excited for what's to come in 2024. In today’s newsletter, we cover:

• Google expects significant productivity gains through AI but the workforce needs to evolve – Can you expect the same?
• How should banks think about GenAI copyright lawsuits?
• As autonomous agents take off, we need a framework to manage how they get built and how they interoperate
• GenAI takes center-stage in Mike Abbott’s top 10 banking trends for 2024

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Google expects significant productivity gains through AI but the workforce needs to evolve – Can you expect the same?

Editah Patrick’s article tells the story of how the tech giant is undergoing a major restructuring, heavily integrating AI into its 30,000-person unit. As we have previously touched on in this newsletter, GenAI poses a major disruption to almost every industry, and Google’s recent efforts highlight the transformation benefits it could have for other major firms and in the banking space. Editah details out how this strategic shift, fueled by the success of existing AI-powered ad tools, aims to automate tasks, boost efficiency, and ultimately drive higher profit margins. Editah warns though that while Google anticipates enhanced campaign delivery and optimization, they acknowledge a significant impact is likely, possibly involving reassignments and layoffs. While this is another example where the benefit case for Operations transformation is being proven out, it brings to fore again the need for a managed transition as we all accelerate towards a Human + Machine workforce. This balancing act is one that all COOs will need to grapple with – how will transforming technology transform the future of their workforce?

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How should banks think about GenAI copyright lawsuits?

Bill Rosenblatt’s article in Forbes spotlights the critical point that the legal woes facing OpenAI and many other AI firms is business as usual in the world of enterprise IT. He describes OpenAI's Copyright Shield, which is an indemnification clause in a contract that means the company will defend users against legal claims for copyright infringement that arise from output generated by ChatGPT Enterprise or the OpenAI API and will pay damages that result from such claims. Bill details how this is a standard feature of license agreements for enterprise technology, and one that has existed for decades. Many technology license agreements indemnify customers against lawsuits for patent infringement due to the technology and OpenAI is doing this to attract developers in a fiercely competitive market for generative AI tools. He adds that the most attractive markets for generative AI include large companies (such as banks), which will insist on indemnification clauses in licensing agreements for enterprise technology and view a lack of indemnification as a reason not to select a vendor. This is especially true where the technology in question is known to draw lawsuits. OpenAI is currently a defendant in four separate copyright lawsuits brought by groups of authors against ChatGPT and is also a co-defendant in another lawsuit brought by anonymous plaintiffs against OpenAI’s Codex programming code generation technology.

?While Copyright Shield offers legal protection for major customers, it doesn't eliminate risks entirely. Banks will need to understand the limitations of the indemnification clause (e.g., potential caps on damages, scope of coverage) and the broader legal uncertainties surrounding generative AI copyright. No wonder that the risk and legal departments in banks are nervous.

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As autonomous agents take off, we need a framework to manage how they get built and how they interoperate

Sam Meyer wrote an interesting article on the evolution of GenAI agents that got us thinking on what this would mean in the Banking context. Sam explores the evolving landscape of generative AI, with the emergence of semi-autonomous and autonomous agents like Auto-GPT, AssistGPT, and SuperAGI. Auto-GPT and AssistGPT showcase AI's ability to handle complex tasks like creative content creation, predictive analytics, and multi-modal data integration, surpassing basic automation and augmenting human capabilities. On the other hand, the SuperAGI platforms offers a robust ecosystem for managing and evolving multiple autonomous agents, making them readily adaptable. In the banking context, this would mean having autonomous agents for discrete functionality like personalized financial advice, risk assessment, and automated trading. As these agents proliferate, not only will then need to do their core functions but may also need to interact with each other in addition to the humans in the loop. This raises some interesting questions on the best framework to build and subsequently govern the interaction of these autonomous agents. This is a topic we will be looking further into as the field evolves.

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GenAI takes center stage in Mike Abbott’s top 10 banking trends for 2024

Each year, Mike Abbott, the global banking lead at Accenture share his views on the trends that are most likely to drive impacts in the banking industry in the coming year and beyond. The trends are built on cutting edge research, innovative work that Accenture is working on across the world, and where its banking leaders project the innovation is heading. And yes, GenAI is the number one trend that Mike talks about. Equally importantly, GenAI and tradition AI also underpin quite a few of the other trends including a whole new way of working and the need for AI talent to the use of AI in amplifying the power of pricing. One of our favorites also is the use of GenAI to start tackling the thorny topic of core system renewal. Expect to see much more developments in this space this year as GenAI gets deployed aggressively on the Cobol codebase. We recommend reading the detailed report here to go deeper into the trends.

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As always, we hope this newsletter gives you good food for thought as you accelerate your GenAI journey. We welcome swapping notes and ideas along the way. Let's make 2024 the year GenAI comes of age!

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