How can generative AI shape the banking industry?

Spencer Izard, Research Director from Analyst Research firm, PAC, writes in their recent report, ‘How can generative AI shape the banking industry?’ This recent report looks at the technological journey the banking industry has been experiencing for the past decade and how best to understand the role and value of GenAI in its current form.

The report states that, ‘It is often said that the world of technology evolves and innovates at a high velocity. However, with the release of ChatGPT 3.0 at the end of November 2022 PAC feels comfortable saying that another technology inflection point has occurred. In this instance, it was the global awareness of what a large language model (LLM) generative AI is due to the media attention the public beta release of ChatGPT provided. A generative AI (GenAI) is a category of artificial intelligence designed to generate new content from existing data, such as text, images, music, or even videos. These AI models are trained on vast amounts of written, visual, and auditory data to learn patterns and structures within the data it can access. The most common interface with an LLM GenAI is a natural language text interface where a person describes what they want to be generated through a statement or question.’

It goes on to say, ‘As PAC has observed, over the past decade, traditional banks have focused on leveraging cloud, container, and automation technologies to deconstruct the operational complexities of core banking services, internally democratising access to data, and creating a range of digital banking services. Now with the onset of GenAI, PAC considers there to be a confluence of factors that can drive competitive value for traditional banks to fully integrate the depth and breadth of internal and external data they have access to with a diverse range of Fintech services and solutions to drive success for them over at least the next decade. PAC believes that GenAI has the practical potential to fundamentally positively disrupt how front, middle, and back office functions behave by democratising access to complex insights and supporting the ability to deliver banking services at new scale levels.’

Furthermore, the report states that, ‘the opportunity GenAI presents for the banking industry is clear to PAC. Still, as is often the case with transformative technologies, the journey to practical value realisation is not so much. However, what PAC has seen over the last decade, spurred on by the onset of digital transformation, is an ever-increasing requirement by banks to adopt a transformative technology faster into their operational eco-system of solutions and services to meet both market demands and drive competitive advantage in ever decreasing timeframes.’

Commenting on PwC, ‘PAC knows there is value in partnering with a professional services provider like PwC to reduce the time-to-market in adapting banking services to be supported by GenAI. Whilst it is essential for all the key decision-making, strategic development, and ongoing management to be led by leaders in the bank, the access to expertise and resources that a partnership provides through co-innovation and co-creation, from PAC’s experience provides a solid foundation to mitigate risks. PAC has been particularly impressed by the sustained levels of investment, talent upskilling, and development of toolkits and frameworks regarding AI broadly, and generative AI specifically, that PwC has continued to invest in for many years.’

Rima Adas, Partner, EMEA Financial Services Leader, PwC Luxembourg, said, ‘PwC is accelerating investments in technology, industry collaborations, training and in the services we offer to clients. We bring generative AI to businesses with the aim to build trust and deliver concrete outcomes. Our lab-based innovations and the real-world generative AI solutions that we deliver to clients are helping shape the future of responsible AI.’

Click here to read the report