Priya Patel
TLDR: Generative artificial intelligence (AI) is having a significant impact on the financial services sector, with applications ranging from customer interactions to risk assessment models. However, the integration of generative AI also presents challenges, including the propagation of incorrect financial information, security breaches, and the widening digital divide between developed and developing economies. Banks and financial institutions are actively working to navigate these complexities and develop strategies to mitigate risks. Regulatory frameworks are also needed to ensure the safe and secure use of generative AI in finance. Generative AI is driving the shift to banking as a service (BaaS) and embedded finance, with adoption rates on the rise. It is also being used in areas such as environmental, social, and governance (ESG) initiatives and anti-money laundering (AML) efforts. In the UK, the use of generative AI in the financial sector introduces challenges related to business models, workforce capabilities, and resource demands. While there is optimism about the potential for generative AI to drive cost reductions and operational improvements, caution prevails, and most applications are still in the experimental stages. Achieving a return on investment will require careful integration into existing frameworks, which may take several years. Despite challenges, many institutions feel equipped to accommodate generative AI within their risk management strategies.
