FinovateFall 2024: The evolution of the GenAI landscape in financial services

Generative AI continues to be a major talking point in the world of financial services, with businesses across the sector looking to streamline processes, cut costs, and find innovative new use cases to gain a competitive advantage.

FinovateFall 2024, New York

At this year’s FinovateFall conference in New York, GenAI has once again taken centre stage, with a number of panels and keynotes focused on the current state of play with the technology and how it can be implemented effectively.

Cost cutting vs value creation

In a panel session at the conference focused on the GenAI “arms race” in financial services, moderator Jason Henrichs, CEO of Alloy Labs, asked how much of the current use cases of AI are really around cost cutting as opposed to value creation.

Timothy Rickards, senior director, value consulting at Hearsay, a Yaxt company, says: “I don’t know the numbers, but I think that’s obviously the place you go to first, which is logical. I think the trick is, how can you move past that as quickly as possible to make it generative, to make it more innovative, and drive value.

“But I think the first thing humans do is think, oh, it’s like a human, so how can I replace human activity? But I think if you look for its augmentation and improvement, that’s where the value lies.”

Adding to this, Milton Santiago, global head of digital solutions at Silicon Valley Bank, believes that most of the activity around GenAI is “probably in that cost saving or efficiency spectrum right now”.

“I would say that cost savings is a really easy target because it’s very quantifiable. It’s something that’s very known,” he says. “And when you start looking at driving value, it’s harder, right? It requires more creativity, and driving value is going to be very different for every customer and for every bank.

“So it really takes a leap in being able to understand what is it that your clients need and also, how can you leverage AI to be assistive technology versus artificial technology. How can I make the clients’ experiences better and more fulfilling and also more informative to everything that they do?”

To summarise, Sarah Hinkfuss, partner at Bain Capital Ventures, adds that she doesn’t believe “it’s an either-or” when it comes to cutting costs and value creation. “The best solutions are able to do it at a lower price, higher quality, and faster, and so that’s what you’re looking out for,” she says.

A widening gulf?

During the discussion, Henrichs posed the question of whether GenAI is a “great equaliser” for companies across finance or whether the technology is actually widening the gulf between large and small firms due to the latter’s regulatory and technical concerns.

In response, Santiago says: “I think there’s a gap widening taking place, but also I think that, first of all, many smaller organisations are struggling thinking about how do we implement AI. How do you implement it and how do you do it responsibly.

“And you’re going to have individuals that are going to be AI curious and you’re going to have people who are AI fearful. And then you’re going to have those that are just enamoured by the technology. And also, frankly, maybe even pursuing a press release, right? They just want to do something so they can say that they’re relevant and they’re doing something.

“So one of the opportunities, I would say, for any organisation that’s curious about AI and wanting to know how do they get in, is to talk to their suppliers.”

Adding to this, Hinkfuss says that a lot of the biggest banks are actually focused on building their GenAI products internally, and this may, in fact, hand some of the advantage back to smaller firms.

She says: “Something that I think is interesting as it’s playing out, is we still don’t know how beneficial that extra level of specialisation is, like if the internal data because of all the regulatory hurdles actually gives an advantage of taking an open-source model, for example, and fine tuning it within your environment versus just using one of the embedded solutions.

“And so there, I could see the argument where smaller regional banks that are out of the gate faster and using proven tools are able to make more progress more quickly than the large banks that are focused right now on proving that their tech teams are doing something special and differentiated.”

To wait, or not to wait?

When asked whether there was any incentive to waiting when it comes to GenAI adoption to see how the evolution of the technology plays out, Santiago says that the answer is “based on your audience”.

“Depending on the demographics of your client, they may not care, and depending on it, they could,” he says.

Hinkfuss, meanwhile, concludes: “No, everyone should be experimenting, and there are ways to do it really cheaply and within regulatory screening.”

Echoing this sentiment, Rickards says: “I don’t want to be the person that says the mobile phone is a fad. Right. Or that the internet’s a toy. Let’s not be that person. There’s no reason to not go.”