Released at the end of November 2022, ChatGPT rapidly gained traction – reaching one million users in 5 days and less than 2 months later was being actively used by 100 million people. Rapid growth indeed. Beyond the hype many companies have been experimenting – for example using it to draft legal documents and marketing material. A survey by KPMG found that four-fifths of firms said they planned to increase their investment in Gen AI by over 50% by the middle of 2024. Investors are pouring money into startups – in 2023 venture capital firms injected $36b into Gen AI – more than twice as much as in 2022.
Gen AI tools can already create most types of written, image, video, audio, and coded content. But what about banking? How are banks using it? And more importantly how might banks and other financial institutions use it in the near future?
McKinsey estimates a productivity boost of between $200 billion and $340 billion. Use cases include the traditional, for example using a virtual assistant to guide employees through a loan application process with extracts from chat histories and explanations of terms. Or generating personalized marketing and sales materials based on detailed knowledge of customers and total understanding of product details. It has been reported that Morgan Stanley built an AI-assistant that enables its wealth manages to quickly find and synthesize answers from its massive internal knowledge base, while also summarizing the content of client meetings and generating follow-up emails. Tools such as these will not be limited to the largest banks, for example Microsoft’s Copilot works alongside its office automation apps, providing real-time intelligent assistance.
To make sense of Gen AI’s potential, the first point to note is that it is not just a technological advancement; it's a catalyst for reinventing the very fabric of banking. The opportunities are vast and profound, extending far beyond the realm of conventional customer service enhancements. So, banks need to anticipate a world where personalized products and services, empowered by predictive analytics and enabled by 24x7 high-fidelity interactions with customers, become the norm.
The latest trends in AI and Generative AI showcase an evolution from transactional to transformational. Beyond improving customer interactions, banks are now strategically deploying AI to enhance employee productivity. This shift not only reduces operational costs but also liberates talented staff from routine tasks, enabling them to focus on higher-value activities that demand creativity and strategic thinking.
One of the noteworthy trends is the use of AI tools to predict the future, heralding a new era of proactive banking. Predictive analytics powered by Generative AI allows banks to anticipate customer needs, forecast market trends, and align offers tailored to individual requirements. By analyzing vast amounts of data, Generative AI can identify patterns and trends that humans may miss, enabling banks to offer more personalized and relevant products and services. This can help banks build stronger relationships with their customers and increase customer loyalty. It's not just about reacting to the present; it's about shaping the future of banking interactions.
The global banking landscape is becoming a playground for innovation, with AI acting as a catalyst for personalized financial solutions. Banks are leveraging Generative AI to craft bespoke offerings that resonate with the unique preferences and financial goals of each customer. This shift from a one-size-fits-all approach to hyper-personalization is redefining customer experiences and fostering a deeper sense of engagement and loyalty.
As leaders in the industry, it's imperative to recognize that the AI journey is not a destination but an ongoing evolution. The market is dynamic, and successful implementation requires a commitment to staying abreast of the latest advancements, continually refining strategies, and embracing a culture of adaptability. The trends we observe today are markers for the future, signaling a trajectory where the fusion of AI and banking becomes seamless and indispensable.
The intersection of Generative AI and banking is not just a technological convergence; it's a revolution that is reshaping customer experiences, enhancing employee productivity, and propelling the industry into an era of unprecedented innovation. As we navigate this transformative journey, Finastra stands at the forefront, committed to pioneering the future of banking with Generative AI. The possibilities are boundless, and the journey has just begun.
Take a look at our white paper ‘Transforming the future of banking with Generative AI’ for more insight here.
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