83% of Bank Execs Eye GenAI With Hope and Hesitation

The financial services sector has long been a proving ground for emerging technologies. The current era of disruption is no exception to this history. GenAI represents the latest transformative technology reshaping finance and banking. It has applications for everything from enhancing consumer interactions to refining risk assessment models.

Its influence is already pivotal in financial decision-making, yet GenAI introduces significant challenges. These encompass the risks of propagating incorrect financial information, exposing sensitive banking data to security breaches and expanding the digital gulf between modern and developing economies.

The “Generative AI Tracker®” examines how GenAI is advancing banking-as-a-service (BaaS) initiatives and embedded finance, with applications ranging from personalized customer services to anti-money laundering programs.

The Real Action in GenAI Lies Outside Legacy Finance Players

Ally Financial, based in the United States, uses its digital-only platform to foster innovation, particularly in AI. The company’s approach to AI begins with defining business use cases, prioritizing a business-driven process bolstered by comprehensive data collection. Ally’s proprietary AI platform, Ally.ai, merges established AI and emerging GenAI functionalities while emphasizing data security.

The company’s recent application in marketing has demonstrated a significant reduction in campaign and content creation time by 34%, showcasing productivity boosts and creative enhancement. In addition, Ally has successfully implemented GenAI for customer call summaries. This change resulted in significant productivity gains, with 90% of calls requiring no additional human intervention. Also, it has allowed employees to concentrate on more complex customer interactions.

To learn more, visit the Tracker’s Companies of Note section.

AI Is Going Beyond Security to Encompass Customer Experiences

AI is emerging as a key focus in the banking industry. In a recent banking survey, 92% of respondents said they either plan to use or already use AI, primarily for security and fraud mitigation. Another significant application of AI is in enhancing customer experience (CX). Banks are concentrating on creating a customer-centric culture and modifying operating models to improve CX. These areas indicate the growing importance of AI in shaping core banking functions and customer interactions.

Nevertheless, the adoption of GenAI in banking remains at an early stage. One-quarter of banks have implemented and are scaling their GenAI initiatives. Still, roughly 70% remain in the evaluation and experimental phase. Banks acknowledge their limited ability to leverage AI effectively, ranking it low among their capabilities. Consequently, many are seeking assistance from third-party providers for AI implementation.

To learn more, visit the Tracker’s Innovation and Use Cases section.

GenAI-Enhanced Synthetic Identity Fraud Is a Growing Problem

A survey of 500 American fraud and risk professionals finds that half of companies believe their synthetic fraud prevention measures are only somewhat effective. The financial impact of this deficiency is considerable, with nearly 9 in 10 companies extending credit to synthetic identities and 1 in five valuing average losses per incident between $50,000 and $100,000.

With the aid of GenAI, fraudsters are ginning up increasingly sophisticated strategies, nurturing accounts over extended periods for greater financial gain, for example. Consequently, FIs struggle with legacy technologies and techniques, proving inadequate against these sophisticated synthetic identities. This inadequacy leads to financial losses and risks reputational harm and competitive disadvantage, underscoring the need for a multilayered approach to combat AI-generated synthetic identity fraud.

To learn more, visit the Tracker’s Issues and Challenges section.

About the GenAI Tracker

The “Generative AI Tracker®,” a collaboration with AI-ID, examines how generative AI is advancing banking-as-a-service (BaaS) initiatives and embedded finance, with applications ranging from personalized customer services to anti-money laundering programs.