My Thoughts on GenAI in Financial Services

Since the launch of ChatGPT late last year, generative artificial intelligence (GenAI) has become a buzz word. Both institutions and individuals are in a race to understand what it means, how it can impact us and how best to leverage the technology to advance their business and life. Some days it feels as though everyone who’s someone, is doing something in this space.

But what really is GenAI? How's it different to AI? And what are some examples that can help us understand its potential? Finally, how will the technology impact financial services? If these are some questions on your mind, you’re in the right place.

What is GenAI?

To understand GenAI, let’s first look at AI in general.

Artificial Intelligence, also called AI, is a broad discipline that refers to intelligent machines and encapsulates various ways through which machines solve problems. It’s a field that brings together computer science and datasets, ideally in a Cloud as they're ideal for higher storage and complex computing.

Generative AI, or GenAI is a type of AI where machines create new content. This can be in the form of text, audio, imagery, synthetic data, and even code. This is done via models, such as models that convert text to image, text to video and so on. These models can follow instructions, answer questions, perform searches, extract information, analyse sentiments, and so on. Though OpenAI's ChatGPT is the most popular example of GenAI at the moment, other products include?Google’s Bard?and Stability AI's Stable Diffusion.

How can you use GenAI?

The uses of GenAI are limited only by imagination. It can help firms and individuals from various walks of life to solve problems such as efficiency, personalisation, back-end processing, insight generation and so on.

For example, one great use of GenAI is that it can mine through large volumes of data and help you understand complex subjects in an easy to understand narrative. Besides content creators, teachers and students discovered this early on and while teachers use it to structure curriculums, students use it to support learning. Doctors use it to generate medical letters. As coding assistant, GenAI can help developers write and fix code. When it comes to social media, you can also use it to create bots that respond to specific posts in specific ways, such as likes and comments. When it comes to planning, it can help plan everything from your investment portfolio to your protein rich meal plan or your core workout.

Who are the biggest users and adopters?

Before we deep dive into the cases specific to financial services, let's look at broad cohorts of early adopters.

1. Technology Firms

Not surprisingly, the biggest adopters are technology firms such as Google, Apple, Amazon, and Microsoft. As example, Microsoft has integrated GenAI into Bing and is testing the integration a Copilot into its products to bring GenAI into all lines of business. Think of this as a copilot, or a personal assistant, who'll work with you as you make your way through your spreadsheets and presentations, suggesting content and making the edits based on your instructions. Apple's Siri is also due a GenAI makeover.

2. Data Rich Firms?

Given that GenAI generates responses based on data, it's no surprise that data rich firms have an advantage. Therefore, organisations such as banks, mainly incumbents, and those in healthcare or government that have plenty of fragmented and both structured and unstructured data, will look to utilise GenAI. Examples include pharmaceuticals that are using GenAI to gauge patient responses to certain treatments based on various attributes such as gender, race, age, diet and so on. With respect to sports, imagine as though a player or team has every details of all previous games played by their opponents, every stroke, every strategy, every outcome - all on their fingertips.

3. Others

Finally, the third set of users includes those who'll be disrupted and need to integrate the GenAI into their feature set. This includes sectors such as media, telecom, retail, and disciplines such as HR and cyber, that'll use GenAI for sales, productivity gains, hyper personalisation and so on. For example Ford has established Latitude AI subsidiary and Musk intends to use GenAI for Twitter.

How GenAI can support financial services firms?

Finally, financial services.

As mentioned above, data rich incumbents have a distinct advantage here as they have hundreds of years' worth of data to leverage. While data alone can't solve all problems, having bespoke data combined with a powerful way to mine it, can be a distinct advantage.

Though banks such as JPMorgan and Goldman Sachs are known to have banned the use of external chatbots, there's nothing to stop the development of internal systems to help support various use cases such as client servicing, compliance, fraud monitoring, through to risk management and reporting.

Here below are some examples.

1. Code Generation

According to this article in CNBC, Goldman Sachs is using an in house ChatGPT style AI to assist developers generate and test code

2. Financial Advice

Morgan Stanley is using the technology to support its financial advisors, while JPMorgan is developing its own programme to select financial securities. It's believed that JPMorgan could be the first financial incumbent to release a GPT-like product directly to its customers.

3. Other Use Cases

Some other use cases include loan applications whereby applicants can download apps to help lenders assess credit worthiness. Complimentary to that, loan customisation features can help lenders provide more customised options by triangulating customer data with their own internal data on loan performances, risk appetite, and so on. Another powerful use cases is that of fraud prevention. I believe firms can provide extremely robust responses to fraud when they combine real time data, such as transaction monitoring information, on more static information, such as nature of business and leverage GenAI to eliminate false positives. The same is true of onboarding, where false positives are a burning issue. I'd like to believe that this is just the beginning of the GenAI impact and there's a lot more to come.

Summary?

GenAI holds the potential to transform the way we think and work. As with all other sectors, financial services executives, including CEOs, COOs, CIOs, CROs and CTOs, should take a moment to understand the changes and disrupt their own thinking. Alternatively, they must prepare to be disrupted.

Though GenAI does carry significant risk, firms must assess how they plan to use the technology, and then depending upon the intended use, mitigate the risks accordingly. Regardless of the risk, doing nothing is non-option because to me is a classic case where the risk of doing nothing is greater than the risk of doing something.

I hope this article has provided some valuable insight into the new GenAI space and how you can incorporate it into your firm’s strategy. I really value your opinion, so please leave some feedback on whether this piece was helpful and what else you might like me to cover. If you’re hungry for regular insights, please follow my newsletter, a place where I share regular updates that help you to succeed.

About Vinita

I’m a?senior leader in the financial services industry with over 25 years of corporate experience and have held substantial leadership roles in prestigious firms such as HSBC, Barclays and BSkyB. I’m also an accredited coach, a published author, global speaker, Udemy instructor and a marathon finisher. Click here?to contact me for speaking and coaching engagements.