Generative AI or Gen AI became all the rage at the beginning of 2023 when ChatGPT caught fire. It put AI (artificial intelligence) in the hands of millions of users who previously had little interaction directly with AI. Where is Gen AI today, and where is it heading? How will it impact financial institutions? Let's find out.
What is Generative AI?
Gen AI can be thought of as the successor to chatbots. Chatbots have evolved over recent years. They came to the forefront when the pandemic hit, as financial institutions relied heavily on them for customer support. Gen AI is different in that it doesn't provide canned responses. Instead, it scours the Internet for its resources and answers and presents them in a natural language response.
Some Gen AIs by larger companies include Google's Bard, Microsoft's Bing and Copilot (for programmers), and ChapGPT.
Generative AI and Financial Institutions
Gen AI can help financial institutions in their battle against fraud. AI is already being used to detect fraud in real time. Gen AI can increase this efficiency with its pattern detection and ability to reach the Internet.
Remaining compliant with regulations is a costly and time-consuming part of being a financial institution. Gen AI can prepare many of the compliance documents currently being prepared by humans. There are two benefits to Gen AI taking over these tasks. One is the reduction in cost. The other is that employees are freed up to work on more complex problems.
Common tasks that are executed often, such as anti-money laundering (AML) and knowing your customer (KYC), can also be accomplished by Gen AI.
The Future of Generative AI
The future of Gen AI is growth. An October 2023 report published by Acumen Research and Consulting showed that the Gen AI market is expected to grow by a compound annual growth rate (CAGR) of 35.1% from 2023 to 2032. By 2032, the market is expected to reach $208.8 billion. For reference, the market in 2022 was valued at $10.5 billion.
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