Seizing the Billion-Dollar Opportunity of Generative AI in Financial Services

Seizing the Billion-Dollar Opportunity of Generative AI in Financial Services

by April 16, 2024

In an era where technology and innovation are pivotal to competitive advantage, the financial services industry stands on the cusp of a transformative revolution, primarily driven by the advent and integration of generative AI technologies.

For the uninitiated, this advanced form of artificial intelligence has been transformative in generating fresh content, ranging from textual and visual materials to complex data configurations, through analysing existing datasets.

Its deployment promises significant impacts across financial industries like banking, insurance and wealth management, where the generation and analyses of data are pivotal.

Dipen Mehta, the Head of Financial Services, Asia Pacific at SoftServe, a global leader in digital innovation and software engineering, delves into the profound impact of generative AI across banking and insurance sectors, advocating for digital acceleration as an indispensable strategy for financial institutions aiming to retain their edge in a fiercely competitive market.

Generative AI Could Add US$340 billion in New Value for Financial Services

Much like its widely used consumer applications such as OpenAI’s ChatGPT, generative AI brings the promise of increased efficiency and creativity across many sectors, including financial services in Asia.

This potential has led the McKinsey Global Institute to predict that generative AI could add an annual value of US$2.6 trillion to US$4.4 trillion globally across various industries. Specifically, the banking sector could see an annual boost of US$200 billion to US$340 billion, representing 9% to 15% of operating profits.

Will Generative AI Fundamentally Reshape Bankingnd Financial Services?

Recognising this incredible promise, Dipen asserts,

“Generative AI is probably the first piece of technology that really impacts the end-to-end lifecycle of financial services.”

According to him, this technology heralds a new age where product development, customer service, operational efficiency, and marketing are all enhanced significantly through digital innovation.

Unlike previous technologies that targeted specific operational facets, generative AI presents a holistic opportunity to redefine service delivery. Dipen explains that gen AI is actually the first technology “seen in a very long time” that’s going to actively reshape how the product development lifecycle is thought about, with the potential to effect end-to-end product transformation — from concept right up to distribution stage.

Gen AI Accelerates the Product Development Lifecycle

In today’s dynamic environment, digital acceleration is no longer merely an option, but a strategic imperative for banks and insurance companies.

Dipen recognises the potential of generative AI to enhance operational efficiencies and speed up product development, but says the promise for businesses goes beyond that to shrinking product developing and testing times, onboarding customers, examining data outcomes, and improving customer service interactions, among many others.

“Generative AI really will accelerate that development lifecycle, all the way from defining products through to developing, testing, and then actually launching,”

says Dipen.

This acceleration is not just about speed to market — but encompasses the quality of engagement and the depth of customer insights, thereby enabling a more nuanced understanding and fulfillment of customer needs.

Dipen notes that while there are some “nice use cases” in individual verticals, the difference maker will be many ecosystem players providing bespoke services, “so there’s gonna be many ecosystem partners to bring into play.”

“The last piece I’d add to this, is really just around making sure that the partner you work with has experience in financial services, in particular experience in highly regulated industries with complex market structures,”

he adds.

Confronting the Challenges of Generative AI Adoption

One of the key questions marks around emerging technologies in financial services, is that while proofs of concept are intriguing, ascertaining the real, meaningful value the tech can bring is a whole other aspect.

Dipen Mehta

Dipen Mehta

The journey towards fully integrating generative AI into financial services is fraught with challenges, including regulatory compliance, ethical considerations, and the seamless integration of new technologies with legacy systems.

“The partner you work with needs to be thinking about this technology as a platform,”

Dipen advises, stressing the importance of a comprehensive approach to implementation that goes beyond single-purpose use cases. Previously, taking a singular perspective on newly emerging tech has often caused it to be pigeonholed, like blockchain being closely identified with cryptocurrencies, or metaverse visualisation tech frequently thought of as being exclusively for gaming.

To see productive outcomes, the right technology partnership is crucial for navigating the complexities of generative AI adoption in business. According to Dipen, successful integration in tightly regulated fields like finance will greatly depend on ensuring not just the compliance with client-set or local governing frameworks, but also the actual realisation of the technology’s full capabilities.

Real-World Generative AI Partnerships in Financial Services

Though still an emerging field, there are already tangible examples of how strategic partnerships have enabled financial institutions to harness generative AI with rising effectiveness.

In Singapore for instance, banks UOB and OCBC have already rolled out gen AI-enabled virtual assistants with Microsoft — UOB has  introduced Microsoft 365 Copilot as part of the Microsoft 365 Copilot Early Access Program to accelerate productivity among its offices and branch staff.

Meanwhile, OCBC has developed a chatbot in partnership with Microsoft’s Azure OpenAI (developers of ChatGPT) to assist its global workforce of over 30,000 workers with tasks including coding, summarising documents, transcribing calls, and building an internal knowledge base. OCBC says implementing the AI tools has caused employees’ productivity to skyrocket by 50%

Dipen, while noting the nascent stage of specific case studies, points to SoftServe’s collaborations with financial entities to build risk frameworks for capturing and analysing the outcomes of generative AI applications.

This endeavor, he notes, is key to “ensuring alignment with regulatory standards and delivering real value.”

What Lies Ahead for Financial Services with Generative AI

As the financial sector continues to explore and continuously rediscover the vast potential of generative AI, Dipen emphasises the importance of fostering an experimentation mindset.

“It’s really important, if I was within an organisation myself, to foster that experimentation mindset,”

he remarks, highlighting the need for institutions to explore and innovate actively.

The future, as Dipen sees it, involves not just generative AI but a synergy with other emerging technologies such as ultra-fast quantum computing, promising a redefined landscape for financial services.

Like its game-changing potential, generative AI stands as a beacon of transformation for the banking and insurance sectors, offering unprecedented opportunities for innovation, efficiency, and customer engagement.

The insights from SoftServe’s Dipen underline the significance of strategic partnerships and the imperative for digital acceleration, suggesting that the path forward is one of collaboration, innovation, and a deep commitment to leveraging technology for service excellence.

“We are now going to embark on actually changing processes that banks do day to day,”

Dipen reflects, heralding a new chapter in the evolution of financial services that can cooperate with the right strategic partners to leverage the fullest potential of paradigm-shifting generative AI.

SoftServe will be demonstrating its Gen AI solutions at the upcoming Money 20/20 Asia event. Meet the enhanced version of Jade AI, SoftServe’s Gen AI avatar, and explore how SoftServe solutions can revolutionize BFSI processes and customer experiences, from advanced analytics to personalized banking interfaces. Register here to visit SoftServe at Booth #1009.

SoftServe Money2020 Booth


Featured image credit: Edited from Freepik