Financial services based on AI

31/07/2024

Financial services are increasingly utilizing generative AI-based solutions in practice. Large language models have the potential to disrupt virtually every industry, and the financial sector is no exception. Web searches for the phrase "AI in finance" have increased by 525% over the past 24 months (as of June-July 2024)

According to findings by KPMG, the majority of financial reporting executives (65%) are utilizing AI and generative AI features in reporting processes. Additionally, 71% anticipate future dependence on AI solutions, while 48% have already adopted these solutions. KPMG states that executives highlight benefits such as increased efficiency, reduced employee workload, more accurate data, and cost savings.

Zest AI reports that AI has helped a U.S. auto lender reduce costs by nearly 25%. NVIDIA found that teams in financial services are already observing several use cases of AI in their workflows. Consulting firm Gartner estimates that 80% of CFOs plan to increase investments in AI tools over the next two years.

Generative AI will play a key role in enhancing operational efficiency without significant financial and time investments. KPMG reports that nearly half of CEOs (49%) are now leading generative AI initiatives in their organizations, up from 34% in the previous quarter (June-July 2024), highlighting the strategic importance of leadership in enabling implementation goals.

One of the challenges is data security. The Cisco Data Privacy Benchmark 2024 study revealed that approximately 27% of organizations have banned the use of generative AI due to data protection and security risks. As many as 48% of survey participants admitted to entering non-public corporate information into generative AI tools. In an era where the security of corporate and personal information is paramount, 91% of businesses recognize the need to assure customers that their data is being used for intended and legitimate purposes in AI.

As financial services continue to evolve, the implementation and use of generative AI in daily practice is becoming increasingly important for maintaining competitiveness. Financial teams can take several steps to prepare for integrating this technology into their operations:

  • Identify and train the right people for AI adoption - build a team of professionals skilled in AI technologies, attract new talent and enhance AI capabilities among current employees;
  • Develop or acquire a GenAI tool - this involves a critical decision regarding the quantity, quality, and structure of the data available within the organization;
  • Research case studies for preparation and strategy - successful AI implementations in other financial services organizations can serve as inspiration;
  • Collaborate closely with IT teams - collaboration between IT and financial departments is crucial for successful AI adoption;
  • Embrace innovative technology - this requires a mindset shift, acceptance of new concepts, and possibly changes in corporate culture;
  • Pilot programs - before full implementation, it is advisable to test the effectiveness of the solutions being introduced and identify potential issues and challenges early on.

It is important to recognize that we are currently witnessing a lot of hype around generative AI. Without understanding the limitations and potential consequences of using this technology, companies may rush into AI operations without adequate employee training and proper security measures. In this context, leaders in the financial services industry must focus on specific areas where this technology can truly provide significant added value to their businesses.

Sources:

  1. Exploding Topics: 8 Important Finance Trends (2024 & 2025), 06/2024, https://explodingtopics.com/blog/financial-trends 
  2. Alpha Sense: Generative AI in Financial Services, 07/2024, https://www.alpha-sense.com/blog/trends/generative-ai-in-financial-services/ 
  3. PR Newswire: More than 1 in 4 Organizations Banned Use of GenAI Over Privacy and Data Security Risks - New Cisco Study, 01/2024, https://www.prnewswire.com/news-releases/more-than-1-in-4-organizations-banned-use-of-genai-over-privacy-and-data-security-risks--new-cisco-study-302044651.html 
  4. KPMG: AI and Financial Reporting Survey – what are companies doing and where do you stand? 2023, https://kpmg.com/us/en/articles/2023/ai-and-financial-reporting-survey.html 

Images: Exploding Topics, KPMG, Getty Images