Five generative AI use cases for the financial services industry Google Cloud Blog

What Generative AI Means For Banking

generative ai finance use cases

These examples illustrate how technology can augment work through the automation of individual activities that workers would have otherwise had to do themselves. Generative AI tools can enhance the process of developing new versions of products by digitally creating new designs rapidly. A designer can generate packaging designs from scratch or generate variations on an existing design. This technology is developing rapidly and has the potential to add text-to-video generation. However, the quality of IT architecture still largely depends on software architects, rather than on initial drafts that generative AI’s current capabilities allow it to produce.

AI enables banks to offer personalized financial advice and product recommendations to customers based on their spending habits, search behaviors, and financial histories. Chatbots and virtual assistants powered by natural language processing (NLP) provide 24/7 customer service. Algorithmic trading is one of the most popular applications of AI in fintech and a cornerstone of modern financial markets. AI-driven algorithms analyze vast datasets at lightning speed, identify market trends, and execute trades with split-second timing.

generative ai finance use cases

In finance, a vast amount of data is unstructured, coming in the form of news articles, social media posts, and financial reports. One of the notable advantages of Generative AI in credit scoring is its potential to reduce biases and improve fairness. By analyzing a diverse range of factors, including alternative data sources, Generative AI models can offer a more nuanced and unbiased assessment. This not only benefits individuals who may have limited traditional credit histories but also contributes to creating a fairer and more inclusive credit scoring system. Algorithmic trading, powered by Generative AI, has guided a new era of automated decision-making in financial markets. Traditional trading methods are often limited by human speed and capacity, but Generative AI algorithms can analyze vast datasets and execute trades at speeds unattainable by humans.

We can partner with you to develop strategies that tackle any difficulties, enabling you to reap the transformative benefits of Gen AI. For instance, imagine your financial advisors struggling to keep up with client demands, leading to errors and delays. With access to your data and research, this assistant provides quick and accurate advice to your team, ensuring faster, more reliable support services. The algorithms are designed to provide insights into their decision-making processes. This transparency allows users, including financial professionals and regulators, to comprehend the reasoning behind AI-generated decisions. By demystifying the decision-making process, Generative AI aims to foster confidence in the reliability and trustworthiness of its outputs.

While existing Machine Learning (ML) tools are well suited to predict the marketing or sales offers for specific customer segments based on available parameters, it’s not always easy to quickly operationalize those insights. Generative AI will improve its ability to create synthetic data and augment existing datasets, thereby providing deeper customer insights, market scenarios, and risk factors. With a strong understanding of the overall sentiment, financial institutions can quickly respond to changing public perceptions, anticipate market movements, and tailor their strategies to meet customer needs.

How to Implement Generative AI in Finance?

Making purposeful decisions with an explicit strategy (for example, about where value will really be created) is a hallmark of successful scale efforts. As the technology advances, banks might find it beneficial to adopt a more federated approach for specific functions, allowing individual domains to identify and prioritize activities according to their needs. Institutions must reflect on why their current operational structure struggles to seamlessly integrate such innovative capabilities and why the task requires exceptional effort.

The model combines search and content creation so wealth managers can find and tailor information for any client at any moment. Generative AI could have a significant impact on the banking industry, generating value from increased productivity of 2.8 to 4.7 percent of the industry’s annual revenues, or an additional $200 billion to $340 billion. On top of that impact, the use of generative AI tools could also enhance customer satisfaction, improve decision making and employee experience, and decrease risks through better monitoring of fraud and risk. While other generative design techniques have already unlocked some of the potential to apply AI in R&D, their cost and data requirements, such as the use of “traditional” machine learning, can limit their application. Pretrained foundation models that underpin generative AI, or models that have been enhanced with fine-tuning, have much broader areas of application than models optimized for a single task.

This commitment to thorough validation and testing instills confidence in users, assuring them that the technology has been diligently vetted before deployment. Before Generative AI algorithms are put into action, they undergo rigorous validation and testing processes. This is similar to quality control checks to ensure that the algorithms perform as intended. This goal-oriented approach provides a clear roadmap for financial decision-making, empowering individuals to make informed choices that lead to the achievement of their objectives.

In our experience, this transition is a work in progress for most banks, and operating models are still evolving. Gen AI models help finance businesses succeed because of the advanced algorithms and deep learning technology usage for data analysis, pattern identification, and insights generation. AI companies use standard Gen AI models that include LLMs, GANs, VAEs, transformers, and others. Risk assessment and management is one of the best generative AI use cases in the finance industry, allowing finance businesses to evaluate credit risk for borrowers in a few seconds. Gen AI algorithms analyze customer data from different sources, including financial statements, credit history, and economic indicators, to make informed decisions regarding loan approval, credit limits, and interest rates.

Consolidate Internal and External Deal Intelligence

AI can revolutionize financial services organizations with real value and cost savings — but only if you’re using the right data. Based on developments in generative AI, technology performance is now expected to match median human performance and reach top-quartile human performance earlier than previously estimated across a wide range of capabilities (Exhibit 6). For example, MGI previously identified 2027 as the earliest year when median human performance for natural-language understanding might be achieved in technology, but in this new analysis, the corresponding point is 2023. Based on a historical analysis of various technologies, we modeled a range of adoption timelines from eight to 27 years between the beginning of adoption and its plateau, using sigmoidal curves (S-curves). This range implicitly accounts for the many factors that could affect the pace at which adoption occurs, including regulation, levels of investment, and management decision making within firms. We also surveyed experts in the automation of each of these capabilities to estimate automation technologies’ current performance level against each of these capabilities, as well as how the technology’s performance might advance over time.

AI technology enables finance professionals to focus on higher-value activities, such as strategic planning and analysis, instead of manual and transactional activities. Generative AI empowers faster and better data-driven decisions based on historical data, market trends and the use of AI foundation models that identify patterns and anomalies often missed by traditional analysis methods. This not only enhances efficiency but also enables professionals to make more informed decisions based on accurate and up-to-date information.

KPMG’s multi-disciplinary approach and deep, practical industry knowledge help clients meet challenges and respond to opportunities. To further demystify the new technology, two or three high-profile, high-impact value-generating lighthouses within priority domains can build consensus regarding the value of gen AI. They can also explain to employees in practical terms how gen AI will enhance their jobs. About the Google Cloud Generative AI Benchmarking StudyThe Google Cloud Customer Intelligence team conducted the Google Cloud Generative AI Benchmarking Study in mid-2023.

With the release of FP&A Genius, the ChatGPT style Chatbot for finance professionals, Datarails took their automation to the next level. Generative AI’s ability to understand and use natural language for a variety of activities and tasks largely explains why automation potential has risen so steeply. Some 40 percent of the activities that workers perform in the economy require at least a median level of human understanding of natural language.

Also, data enhancements that align with regulatory compliance ensure winning results. For example, Deutsche Bank is testing Google Cloud’s gen AI and LLMs at scale to provide new insights to financial analysts, driving operational efficiencies and execution velocity. There is an opportunity to significantly reduce the time it takes to perform banking operations and financial analysts’ tasks, empowering employees by increasing their productivity. To fully understand global markets and risk, investment firms must analyze diverse company filings, transcripts, reports, and complex data in multiple formats, and quickly and effectively query the data to fill their knowledge bases.

  • In the near future, we expect applications that target specific industries and functions will provide more value than those that are more general.
  • Picking a single use case that solves a specific business problem is a great place to start.
  • In a scenario of unstoppable technological progress, AI will be one of the key drivers shaping future change in the financial landscape.

Financial entities constantly face the challenge of identifying and stopping fraud, given that new fraudulent tactics rapidly evolve today. As a result, traditional, static models often fall behind the ever-changing techniques used by fraudsters. Business leaders are increasingly enthusiastic about Generative AI (GenAI) and its potential to bolster efficiency in almost every finance function.

Second, we estimated a range of potential costs for this technology when it is first introduced, and then declining over time, based on historical precedents. The potential of technological capabilities in a lab does not necessarily mean they can be immediately integrated into a solution that automates a specific work activity—developing such solutions takes time. Even when such a solution is developed, it might not be economically feasible to use if its costs exceed those of human labor.

Writing complex lines of code is an intricate task that requires sharp concentration, and even then, there’s a high chance you’ll end up making a mistake. For example, when you instruct a text-to-image AI model to create an image of a cat smoking a pipe, it scans through all the training images it has been fed. Instead of handing over a manual, you use words around the generative ai finance use cases child, who eventually picks those up from you and starts speaking. Tech Report is one of the oldest hardware, news, and tech review sites on the internet. We write helpful technology guides, unbiased product reviews, and report on the latest tech and crypto news. We maintain editorial independence and consider content quality and factual accuracy to be non-negotiable.

Gen AI can act as an assistant or a coach to employees by helping them do their job more efficiently and ultimately enabling them to focus on strategic, high-impact activities. For example, coding assistance and generation, such as Codey, which is a family of code models built on PaLM 2, can dramatically increase programming speed, quality, https://chat.openai.com/ and comprehension. Using gen AI can help address some of the most acute talent issues in the industry, such as software developers, risk and compliance experts, and front-line branch and call center employees. The regulatory environment for GenAI, particularly in finance, is still evolving and varies widely across different regions.

  • With iterative development, identifies issues that are addressed effectively by the team before it’s launched for the customers.
  • This high containment rate is driven by interface.ai’s combination of graph-grounded and Generative AI technologies.
  • Additionally, integrated content sets can prove to be beneficial as a single “source of truth,” along with summarizations produced by genAI that can quickly surface insights and jumpstart research on new companies or markets.
  • DRL models combine deep learning with reinforcement learning techniques to learn complex behaviors and generate sequences of actions.

Though this journey is still in its infancy, Executive Leaders of BFSIs are starting to realize the potential of AI and strides are being taken to accelerate this transformation. The transformative power of generative AI is reshaping the finance and banking landscape, providing unparalleled opportunities for growth and innovation. The deployment of generative AI and other technologies could help accelerate productivity growth, partially compensating for declining employment growth and enabling overall economic growth.

Automation of accounting functions

They’re leveraging our best-in-class search technology that saves time by delivering and summarizing the most relevant results across their proprietary internal content and hundreds of millions of premium external documents. Ultimately, not only does AlphaSense speed up your internal knowledge search but ensures privacy and security from external, malicious forces. Gen AI certainly has the potential to create significant value for banks and other financial institutions by improving their productivity.

Participants included IT decision-makers, business decision-makers, and CXOs from 1,000+ employee organizations considering or using AI. Participants did not know Google was the research sponsor and the identity of participants was not revealed to Google. Overall, GenAI delivers a more reliable and streamlined credit assessment process, benefiting both lenders and borrowers. Keep reading to explore the potential of Generative AI in finance and get your answers.

AI’s impact on banking is just beginning and eventually it could drive reinvention across every part … Before interface.ai, GLCU used a non-AI-powered IVR system that averaged a 25% call containment rate (the % of calls successfully handled without the need for human intervention). With interface.a’s Voice AI, the call containment rate now averages 60% during business hours, and up to 75% after hours. These agents can streamline processes, manage repetitive tasks, answer employee questions, as well as edit and translate critical communications.

With platform’s help, lenders can promise higher approval rates for these underserved groups. Thus, ZAML’s distinctive approach paves the way for more inclusive financial practices. At the same time, the solution aligns with regulatory standards through its transparent data modeling explanations.

In this visual Explainer, we’ve compiled all the answers we have so far—in 15 McKinsey charts. We expect this space to evolve rapidly and will continue to roll out our research as that happens. To stay up to date on this topic, register for our email alerts on “artificial intelligence” here.

Artificial Intelligence automatically undertakes many financial activities and optimizes them; hence, this brings down operational costs. This fall in expenses directly translates into savings for the businesses and, therefore, more affordably priced services to customers. Taking a glance at the plethora of financial regulations could sometimes be overwhelming. AI in finance simplifies all these with the automation of tasks related to being in compliance and better accuracy in reporting. Not only will this reduce the complexity that comes with these regulations, but it will also bring a new layer of efficiency in financial operations that can place an organization on top of its compliance requirements.

This results in a more accurate assessment of an individual’s creditworthiness, leading to smarter lending decisions. Generative AI reshapes how financial tips are delivered, customizing them to personal preferences. By analyzing profiles and history, the technology tailors advice to each client’s unique needs and goals. This personalized approach optimizes investment strategies, aligning with risk tolerances and return objectives. As Generative AI and FinTech continue to merge, they are forming a dynamic duo that is redefining financial services.

Keeping up with changing rules, trends, and financial market conditions takes time and effort. Gen AI helps finance businesses sift through and analyze large amounts of information and regulatory data to provide insights for the upcoming changes in regulatory code or trends to reduce regulatory risks. In the context of conversational finance, generative AI models can be used to produce more natural and contextually relevant responses, as they are trained to understand and generate human-like language patterns. As a result, generative AI can significantly enhance the performance and user experience of financial conversational AI systems by providing more accurate, engaging, and nuanced interactions with users. For instance, Morgan Stanley employs OpenAI-powered chatbots to support financial advisors by utilizing the company’s internal collection of research and data as a knowledge resource.

Our analysis captures only the direct impact generative AI might have on the productivity of customer operations. Traditional credit scoring models often rely on historical financial data, but Generative AI considers a broader spectrum of information, including non-traditional data sources. This holistic approach provides a more comprehensive evaluation of an individual’s or a business’s creditworthiness.

Although many countries have dedicated AI strategies (OECD, 2019[52]), a very small number of jurisdictions have current requirements that are specifically targeting AI-based algorithms and models. Natural Language Processing (NLP), a subset of AI, is the ability of a computer program to understand human language as it is spoken and written (referred to as natural language). They can be external service providers in the form of an API endpoint, or actual nodes of the chain.

generative ai finance use cases

Comprehensive research helps outline the AI vision and create an AI strategy that will be the cornerstone of your project. For example, BloombergGPT can accurately respond to some finance related questions compared to other generative models. Explore how generative AI legal applications can help take actions against fraudulent activities. This automation not only streamlines the reporting process and reduces manual effort, but it also ensures consistency, accuracy, and timely delivery of reports.

Improved Customer Experience

It helps banks and financial institutions assess customers’ creditworthiness, determine appropriate credit limits, and set loan pricing based on risk. However, both decision-makers and loan applicants need clear explanations of AI-based decisions, such as reasons for application denials, to foster trust and improve customer awareness for future applications. Yes, generative AI uses machine learning to process the training data, understand human input, and then produce outputs based on what we request.

generative ai finance use cases

Fraud detection systems analyze clients’ behavior, location, and buying habits and trigger a security mechanism when something seems out of order and contradicts the established spending pattern. The data that can be seen includes credit history, demographic data, and borrower candidate behavior. To minimize the risk of failure to pay, they will check the credit score of the borrower candidate first before disbursing funds. If we only rely on human manual work, it really takes time and tends to be more inefficient.

Artificial Intelligence (AI) is rapidly transforming the finance industry, revolutionizing the way financial institutions operate and profoundly impacting various aspects of finance. The integration of AI in finance has brought forth numerous benefits of AI in finance, and nowadays, there is a wide range of AI applications in finance that can prove to be game changers in the future. Artificial Intelligence provides a faster, more accurate assessment of a potential borrower, at less cost, and accounts for a wider variety of factors, which leads to a better-informed, data-backed decision. Credit scoring provided by AI is based on more complex and sophisticated rules compared to those used in traditional credit scoring systems. JPMorgan Chase, one of the largest banks in the United States, has been at the forefront of adopting AI and ML technologies to enhance customer banking experiences.

This instrument grants financial advisors quick access to a vast repository of around 100,000 research reports. Designed to interpret and respond to queries in complete sentences, it closely mirrors human interaction, thereby enriching the user experience. Human oversight is essential to ensure that AI aligns with organizational values, regulatory requirements, and ethical standards.

There’s no denying that establishing benchmarking terms and building out comps today take longer due to the fragmentation of historical deal data housed across CRMs and other content sources. That’s why growing numbers of investment teams are embracing genAI to take advantage of a single search that pulls from every internal and external resource. It is the combination of a predominant mindset, actions (both big and small) that we all commit to every day, and the underlying processes, programs and systems supporting how work gets done. We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

This targeted approach significantly enhances the investigative process, helping investigators quickly pinpoint related cases. Readers tell us they can’t find the information they get from our reporting anywhere else, and we’re proud to provide this important service for our community. We work hard to produce accurate, timely, impactful journalism without paywalls that keeps our region informed and moving forward.

AI trained on these models can perform several functions; it can classify, edit, summarize, answer questions, and draft new content, among other tasks. This is a chat experience powered by Generative AI that aims to transform research for business and financial professionals. The tool taps into a vast library of documents to provide users with instant, accurate insights. To ensure widespread adoption, addressing concerns about security, reliability, and human control is crucial. Initially, it was used for basic tasks, but advancements have enabled AI to handle more complex responsibilities. In finance, AI has become a powerful tool for analyzing data, predicting trends, and making informed decisions.

This initiative, spearheaded by Chief Information Officer Marco Argenti, centralizes all of the firm’s proprietary AI technology on an internal platform known as the GS AI Platform. In addition to incorporating models from OpenAI, Microsoft, and Google, this platform is refined with Goldman’s own data. Now, let’s explore how finance leaders worldwide are actualizing these Generative AI benefits.

For example, when stable diffusion was asked to produce pictures of criminals, most of the output was images of black men. Predictive AI also uses ‘big data’, which are large, complex, and fast-growing collections of data, so big that average data-processing software can’t handle this amount of information. With these tools, you can generate marketing copy, essays, and even full-length novels with simple, short text prompts—and within seconds. The most popular example is Chat GPT, followed by the best AI writing tools like Jasper and Rytr.

It enables tracking solution performance that determines which improvements increase the solution’s effectiveness. Business can either rely on off-the-shelf large language models or fine-tune LLMs for their use cases. For instance, internal audit functions can be greatly enhanced by generative AI through automated analysis and reporting. For example, today, developers need to make a wide range of coding changes to meet Basel III international banking regulation requirements that include thousands of pages of documents. Gen AI could summarize a relevant area of Basel III to help a developer understand the context, identify the parts of the framework that require changes in code, and cross check the code with a Basel III coding repository.

DRL models combine deep learning with reinforcement learning techniques to learn complex behaviors and generate sequences of actions. Call centers of yore were notorious for long wait times and operators, when finally engaged, often couldn’t resolve the customer’s issue. Predict combines the data integration of FP&A tools along with AI and Machine Learning to give the most accurate performance and suggestions for driving the business. FP&A Genius is an AI tool that has the potential to completely disrupt the FP&A industry, as data is pulled up and questions are answered instantly, accurately, safely, and even with visuals and dashboards to help with reporting.

Platforms like AlphaSense leverage purpose-built genAI technology that generate relevant summarizations by securely integrating internal research perspectives. Generative Al’s large language models applied to the financial realm marks a significant leap forward. With generative AI for finance at the forefront, this new AI technology guides the path towards strategic integration while addressing the accompanying challenges, ultimately Chat GPT driving transformative growth. While implementing and scaling up gen AI capabilities can present complex challenges in areas including model tuning and data quality, the process can be easier and more straightforward than a traditional AI project of similar scope. AI companies need relevant financial data from diverse sources to be cleaned and pre-processed in the required format for the best data management and preparation.

generative ai finance use cases

In Canada, for instance, firms are required to have built-in ‘override’ functionalities that automatically disengage the operation of the system or allows the firm to do so remotely, should need be (IIROC, 2012[14]). AI systems in finance offer round-the-clock availability, ensuring continuous support and service to customers regardless of time zones or geographical boundaries. This 24/7 accessibility is especially critical in today’s global financial environment, where transactions and interactions occur at all hours. Generative AI has the potential to revolutionize the entire customer operations function, improving the customer experience and agent productivity through digital self-service and enhancing and augmenting agent skills.

It’s not clear what’s meant by “human level;” Zhou didn’t share any test or benchmark results. But I would note that just because AI can achieve feats like passing the bar exam doesn’t mean it has the skills attorneys gain through experience and education. (The National Conference of Bar Examiners argues as much.) As for the “without hallucinations” bit of Zhou’s claim, it’s not backed up by data, either — at least none that Zhou volunteered.

Experts worry that officials haven’t properly regulated those algorithmic tools that have been around for years. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. We also keep up with the latest news in AI, including any changes in rules and regulations around its use. This ensures that the tools we recommend are compliant and that we’re aware of any developments.

In the end, machine learning can speed up the process of classifying, labeling, and processing documents. Being that Domo has been a pioneer in the AI field for a while (since 2010), it has also been addressing the worry that AI will replace human employees for quite some time. You can foun additiona information about ai customer service and artificial intelligence and NLP. In this case, Domo wants to empower employees to make better and more strategic decisions rather than replace them.

The technology is a tool that assists human professionals in their decision-making processes. Goal-based investing, facilitated by Generative AI, involves aligning investment strategies with specific financial objectives. Whether it’s saving for a home, funding education, or planning for retirement, these algorithms help individuals allocate resources in a way that aligns with their goals. Generative AI is reshaping financial planning by delivering personalization tailored to individual needs. These algorithms analyze a person’s financial situation, goals, and risk tolerance to create customized plans. This personalized approach ensures that financial advice is not one-size-fits-all, but rather, it aligns with the unique circumstances and aspirations of each individual.

Similarly, transformative technology can create turf wars among even the best-intentioned executives. At one institution, a cutting-edge AI tool did not achieve its full potential with the sales force because executives couldn’t decide whether it was a “product” or a “capability” and, therefore, did not put their shoulders behind the rollout. Again, the unstructured nature of much of the data and the size of the data sets add complexity to pinpointing quality issues.

Traditional trading strategies typically rely on technical and fundamental analysis, which can be time-consuming and limited in their ability to adapt to rapidly changing market conditions. Generative AI models, on the other hand, can learn from past experiences and dynamically adjust their strategies in real-time, offering a more efficient and adaptive approach to trading and investment decision-making. AI enhances finance through efficiency and cost savings from business process automation, detecting data pattern anomalies, and improving controls and risk management.

As a result, a broader set of stakeholders are grappling with generative AI’s impact on business and society but without much context to help them make sense of it. AI’s impact on banking is just beginning and eventually it could drive reinvention across every part of the business. Banks are right to be optimistic but they also need to be realistic about the challenges that come along with advancements in technology.

Data agents are like having knowledgeable data analysts and researchers at your fingertips. They can help answer questions about internal and external sources, synthesize research, develop new models — and, best of all, help find the questions we haven’t even thought to ask yet, and then help get the answers. Creative agents can expand your organization with the best design and production skills, working across images, slides, and exploring concepts with workers. Many organizations are building agents for their marketing teams, audio and video production teams, and all the creative people that can use a hand. Old-school adherence methods are time-consuming, prone to error, and carry the threat of costly fines. Traditional planning tools struggle to provide truly tailored recommendations, potentially resulting in generic advice that fails to fully consider individual necessities.

Text-to-text AI models have become quite smart and can help developers write code for different programs in a matter of seconds. Text-to-image Gen AI models like ArtSmart and Jasper can create images like the one above in a matter of seconds. Text-to-image generative AI models can generate unique and creative images with just a text prompt. They use their COiN platform, which leverages AI to analyze legal documents, drastically reducing the time required for data review from hundreds of thousands of hours to seconds. Wipfli’s data and analytics team put together this e-book to help your organization understand potential AI use cases and how to prepare your data for generative AI integration.


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