While no one currently alive witnessed the beginnings of the Industrial Revolution in mid-18th century Britain, we’re all now spectators and participants in the AI revolution – AI is accessible and entrenched everywhere.
While AI is not new, 2023 ushered in a tsunami of AI innovation with the emergence of ChatGPT and generative AI (GenAI). AI is now more readily available and a hot topic in bar rooms and board rooms as individuals and organizations look to capitalize on its transformative potential.
Banks began their experimentation with GenAI in 2023 with many reported successes. In 2024 and beyond, banks will scale adoption across numerous parts of the organization, and leading banks will use AI as an agent of foundational transformation that will reinvent banks entirely. A recent Accenture research report states that banks are more likely to benefit from GenAI than any other industry with a potential productivity boost of 22-30%.
The tip of the AI iceberg
No part of the bank will remain untouched as AI is tested and scaled. But many banks are testing and evaluating how best to apply AI in multiple areas, including:
- Increasing operational efficiency: AI-powered automation will streamline processes, reduce errors, and lower operational costs.
- Fraud detection and prevention: AI will help banks detect fraud in real time through transaction pattern analysis and suspicious behavior flagging, which will help reduce or eliminate financial loss and better protect consumers.
- Loan application, processing, and credit decisioning: Automating loan applications and processing with AI will help banks streamline the loan process, improve credit decisions, reduce bias in decisioning, and support faster cash-in-hand to customers.
- Real-time risk assessment and monitoring: AI can help banks develop better and more accurate risk assessment models and will support better scenario modeling to determine potential risks before they become challenges.
- Personalized customer interactions and banking: AI will help banks better analyze structured and unstructured customer data to personalize product offerings and recommendations. AI may also be used down the line to provide investment advice and wealth management services.
- Market trend analysis and prediction: AI can better analyze and predict market trends and deliver valuable insights that support data-driven decision-making, improved strategic planning, and competitive advantage.
- Improved customer service: AI-powered chatbots, apps, and money services will support customers’ desires for more digital interaction and services. AI also will streamline customer service by automating tasks like account detail updates, loan and credit application reviews and account servicing.
A word of warning: AI and ethics
As noted in Banking 2035: Three Possible Futures, a report developed by SAS in partnership with the Economist Intelligence Unit, “AI has the potential to perpetuate discrimination and exclusion due to the biases held by its developers.” As such, trustworthy AI is paramount to ensure banks develop and implement AI strategies ethically.
Forrester Research also cautions against implementing AI without appropriate oversight and governance, stating in a recent blog post that “at least eight neo-banks and two incumbents will find themselves in front of regulators due to a disaster caused by Generative AI.”
As banks work to infuse AI into their operational models, it’s paramount that they do so with a keen eye on consumer protection, security, and the removal of bias from AI decisioning. While AI can deliver extraordinary power to banks and financial institutions, that power comes with significant responsibility. With ChatGPT’s explosion in our collective experience, consumers are acutely aware of AI's power and its potential for harm.
They’re also keenly aware and well-informed about their privacy and data rights, and they prefer to do business with institutions that communicate transparently and adhere to a strict ethical code of doing what’s right versus simply managing against what’s required.
