Banks Hone In On Gen AI Risk & Compliance, Say Top Concern Is Data Security & Privacy
Here's what's going on this week in AI x Banking.
Hey everyone, thanks for reading!
We’ve been at the Las Vegas ACAMS conference this past week, which has been a blast. It’s been great to meet more people that are curious about what we’re up to. We shared some demos of our products on the exhibit floor (our favorite reaction was “Wow, that’s pretty magical.”)
If you’re in SF for Tech Week in early October, or at Money 2020, and would like to meet up and chat AI & compliance, shoot us a note here.
Coming up this week—a lot of new data from reports by EY & KPMG about the hurdles and excitement around Gen AI & finance. Many executives see security and trust as the largest hurdle for adoption, but are still devoting more resources to Gen AI.
77% Say Data Privacy & Security Are A “Top Concern” On Gen AI
Something we talk a lot about at Greenlite is the importance of trust and security when it comes to any product in the AI x Fintech world. Not only is the space highly regulated, but any issues negatively affect a company's trustworthiness.
Bankers who spoke to KPMG for a new Gen AI survey seem to agree. Over 75% of the respondents said security and data privacy risk is the biggest issue around Gen AI adoption.
The report then mainly talked about how KPMG helps banks mitigate this risk, but is also important for companies to be proactive too. If you know a partner is going to ask for specific information or documents, have that ready to go. Work with them to answer questions and figure out solutions with Gen AI partners.
That being said, we expect this to be a bigger focal point in sales and partnerships over the foreseeable future. Companies are going to need to show how they’re keeping client information secure and compliant, and governments are going to want increased transparency around AI systems.
70% Of Banks See Risk & Compliance As #1 Gen AI Use Case
A clear winner is emerging in the race to figure out Gen AI use cases in finance—risk and compliance is emerging as the frontrunner.
A new EY report surveying 150+ executives said that both retail and commercial bankers think risk and compliance is an area that Gen AI can impact the status quo. A lot of that focused on streamlining onboarding & KYC/AML, or “augmenting” KYC & AML with AI.
It’s a shift in the narrative from even just a few months ago, when most considered code generation and analysis functions to be the strongest immediate use case. But, over the past few months, almost every big bank has rolled out something in those use cases. While it’s having a massive impact on productivity, it’s hard to immediately quantify it in the short term.
On the other hand, risk and compliance systems are extremely manual and repetitive—making it a ripe area for Gen AI. A lot of the work is around researching different businesses/customers and summarizing information, both of which are done very well by LLMs.
Banks are also putting more money into Gen AI projects—45% of banks are already investing in Gen AI teams and spending roughly 20% of their budget on Gen AI.
The Top Gen AI Use Cases In Banking
The EY report also did a deep breakdown into use cases bankers are exploring around Gen AI & financial services.
The list did not disappoint—while there was a big focus on compliance, there were other use cases around things like customer acquisition, marketing, and data that could have a huge impact.
Retail and Commercial banking have a lot of the same needs, especially around data and compliance
But, commercial seems much more focused on unlocking unique insights and new capabilities, while retail seems focused on back-end operations
Stronger regulatory focus from commercial banks
Smarter chatbots
Lots of focus on increasing customer lifetime value through better insights, better cross-selling, and real-time underwriting
Use cases in back office seem to focus on manual tasks (data entry/validation, continuous monitoring, data analysis) across retail & commercial
Better analytics & more predictive insights into customer
Take a look at the data in the images below, and read the full report from EY here.
