With the advent of Generative AI, the banking industry is on the brink of a paradigm shift. This technology is not just about automating processes; it’s about reimagining workflows, transforming roles, and enhancing customer experiences. But what does this mean for banks? How can they leverage this technology to their advantage?
What’s the Impact of Generative AI?
Generative AI is poised to be the most disruptive technology the banking industry has seen in decades. While it may not fundamentally change the basics of banking – collecting and safeguarding deposits and lending money – it has the potential to transform everything else. From redefining customer interactions to revolutionizing risk management, the applications of Generative AI are vast and exciting.
Contrary to the common perception that Generative AI is merely a cost-cutting tool, the real story lies in its potential to boost revenues. By transforming nearly every bank role, the impact on bottom lines could be significant. Some studies even suggest that Generative AI could provide a significant boost to the banking industry.
The Versatility of Generative AI in Banking
Generative AI has hundreds of potential use cases in banking. In risk management, it is already transforming anti-money laundering and know your customer practices. Its coding applications range from reverse engineering decades of complex COBOL code to developing new digital customer experiences at unprecedented speeds.
Customer service is another area where Generative AI can make a significant impact. By raising the bar for personalization and helping representatives solve customer inquiries faster, it can enhance the overall customer experience.
Augmenting Human Potential
The real power of Generative AI lies in its ability to augment workers. Imagine a relationship manager who, during a client conversation, can look at a navigation map-like guide. If the conversation is heading in the wrong direction, the system could provide them with a detour, preventing dead ends and detours in the conversation.
Generative AI is not just about replacing human workers; it’s about empowering them. By handling mundane tasks, it frees up employees to focus on more meaningful work, ultimately enhancing productivity and job satisfaction.
Banking’s New Arithmetic
Generative AI represents a true paradigm shift in banking. Unlike other recent technologies, it offers thousands of opportunities for banks. The challenge isn’t what to do with it, but what not to do. This reinforces the belief that Generative AI is like going from the slide rule to the calculator.
According to a recent Accenture study, a majority of banking leaders (71%) point to Generative AI as a key lever in their continuous reinvention strategy, and two-thirds (66%) see the technology as more of an opportunity than a threat.
A Democratized Disruption
The last year has seen staggering adoption and advancements in Generative AI, with banks moving beyond proof of concepts to use cases. Banks that have already invested in AI and analytics and have strong digital cores are leading the way on Generative AI.
Perhaps the most disruptive thing about Generative AI is that you don’t need to be a goliath or have 100 PhDs in AI or machine learning to take advantage of it. Thanks to cloud-based services, much of this tech can be purchased on a credit card. It just requires the right time and focus.
Establishing the Right Infrastructure
The next step in Generative AI’s evolution at banks will be establishing the right infrastructure. This includes building appropriate guardrails around security and risk and ensuring that AI models, systems, and processes are responsible by design. Model risk management will be critical as large language models proliferate and as banks customize existing models or in some cases build their own.
Reinventing Talent and Ways of Working
Generative AI will impact nearly every part of the bank, requiring banks to reinvent almost every process and role. This means fostering a culture that embraces change and is willing to take advantage of and scale the technology.
The very nature of talent and bank roles could change dramatically. Banks will need to consider how their talent moves around in different ways across the bank and embrace skills-based HR.
What’s the Future of Banking with Generative AI
While Generative AI is unlikely to disrupt banking, there is good reason to believe it will be a driving force for continuous reinvention, making banking infinitely more meaningful for employees, customers, and investors. For staff bogged down with process-oriented work, Generative AI can handle the mundane, freeing up more of their time to help customers. For the end customer, it means a faster, more personalized, and seamless experience from their bank.
As we look to the future, it’s clear that Generative AI holds immense potential for the banking industry. It’s not just about automation; it’s about transformation. And as banks continue to explore and harness the power of this technology, we can expect to see a new era of banking – one that is more efficient, personalized, and customer-centric than ever before.