Generative AI has been on everyone's lips since the release of OpenAI's ChatGPT and Dall-E at the latest. Generative AI is a system based on artificial intelligence that can generate new content such as text, images or code from existing data according to instructions. In this article, we take a detailed look at generative AI and its opportunities, challenges and specific application examples in the banking and finance sector.
For the financial sector, generative AI will no longer be just a vision in 2024, but will become a decisive competitive factor. This is illustrated by a McKinsey study, among others, which expects the highest productivity effects in the financial services sector after the high-tech sector. The use of generative AI in the financial sector is therefore not only technologically necessary, but also offers strategic opportunities to increase efficiency and sustainably transform the industry.
In view of the current shortage of skilled labour, generative AI is becoming a key instrument in the automation of repetitive processes in the financial sector. By relieving employees of routine tasks, they can focus their skills on more demanding tasks. This not only increases employee satisfaction, but also boosts overall productivity in the sector.
Studies by Google, LBBW and other institutes see the greatest productivity gains from the use of AI in the financial industry in the following application areas in particular:
According to our market overview based on findings from customer projects, presentations and specialist conferences such as the Handelsblatt BankenTech Summit 2023, German financial institutions have already launched the first pilot projects for the versatile application purposes. See also the image below.
Leading financial institutions are increasingly collaborating with a large number of start-ups or even acquiring them in order to optimise innovative technologies specifically for their applications. An exemplary case study is provided by Deutsche Bank, which acquired the Berlin start-up Kodex AI in 2023. This start-up specialises in document analysis in the banking sector and therefore represents a strategic acquisition in order to make the technologies usable for Deutsche Bank.
We see many application examples, particularly in the area of financial document search and synthesis, to ensure efficient access to information from unstructured data such as annual financial statements in PDF formats. The service provider DYDON AI, for example, has developed an innovative platform to enable the automated reading of a large number of documents and extract relevant data for ESG reporting in accordance with the EU taxonomy.
In the area of personalised recommendations, for example, the service company FICO uses generative AI to develop an individual strategy for a customer portfolio by linking various sources of information such as marketing offers, risk assessments and price changes.
Auxmoney relies on artificial intelligence in credit scoring for credit automation, which enables it to create personalised credit offers almost in real time. Another innovative approach is being taken by JPMorgan Chase, which has developed an advanced language model to accurately forecast US monetary policy.
Generative AI not only offers potential for increasing efficiency and sales, but also promises a significant improvement in customer satisfaction. However, this promising vision of the future faces a number of challenges, including high time and financial investments, access to algorithms, data and computing power, as well as the strict interpretation of German data protection law. Due to the high computing power required and the associated energy consumption, generative AI is both a hurdle and a helper in terms of sustainability, for example in the preparation of EU taxonomy reports.
The planned EU regulation establishing harmonised rules for artificial intelligence (link) could create a clear framework for the development and use of AI and thus potentially help to overcome ethical and legal challenges. This could minimise risks and create uniform rules for the AI market in the EU in order to promote the integration of the technology across Europe.
It is undisputed that generative AI will shape the financial sector. Companies should invest in AI at an early stage, even if the initial outlay may be greater than the immediate benefits. In a highly regulated and constantly competitive sector such as banking, careful selection of AI application areas is crucial. Close cooperation between IT and the business department is essential for selecting suitable business cases and implementing them in the company. This is precisely where Intero Consulting comes in as a link and supports you in the realisation of implementation projects.
Intero Consulting brings years of experience in IT transformation projects with certified employees and a unique combination of methodological and soft skills as well as technical expertise. We understand the challenges in the financial sector and develop customised solutions. Let's work together to utilise the potential of generative AI - your next project is in good hands with us!
