202 Generative Artificial Intelligence (gen AI), known for its content creation capabilities, has emerged as a transformative technological advancement poised to impact various industries. McKinsey predicts that within the banking sector alone, gen AI could generate between $200-340 billion in value, benefiting corporate banking, retail banking, and software engineering. Violet Chung, senior partner at McKinsey, emphasizes the need for a top-down approach in assessing where gen AI can deliver the most significant benefits. While AI technologies promise substantial returns, financial institutions must carefully evaluate the cost efficiency and productivity gains associated with large-scale implementations. Chung encourages decision-makers to be well-informed about potential risks. According to a McKinsey report titled “Capturing the Full Value of Generative AI in Banking,” specific use cases such as coding and sales demonstrate immediate advantages from gen AI. The technology streamlines processes, providing solutions for more predictive scenarios. An example of creative use in banking is seen in customer engagement, where the loan drawdown process becomes more streamlined. The report notes that OpenAI’s large language model GPT-4, with its ability to access images and text, holds great potential for efficient research in banking. However, infrastructure challenges accompany the incorporation of gen AI into institutional-level banking practices. Addressing complex data gathering and processing requirements, along with legal and compliance risks, is essential. Potential risks include biased or false generation results, intellectual property violations, and concerns about data security and privacy. Kanv Pandit, Group Managing Director, Asia Pacific Banking Services at fintech service provider FIS, stresses the need for clearer “guardrails” as gen AI is integrated into the financial services sector. Content generated must adhere to privacy, copyright, and intellectual property standards while being non-biased and non-offensive. Regulators play a crucial role in providing guidelines, and industry players should exercise caution regarding potential risks. Chung highlights an immediate challenge – a lack of technology talent. Banks require tech talents, including engineers specializing in data sourcing, analysis construction, and large language models. A dedicated legal and compliance team is essential to navigate regulatory challenges related to AI. While Asia is slightly better positioned in the global talent race, facing a shortage of technology talent remains a significant concern. Chung notes that Asian banks have advantages in larger talent pools, especially in markets like India and China. Additionally, the region benefits from a tech-savvy and accepting consumer base, providing a human-driven advantage. The demands of a young population in Asia motivate financial institutions to continue innovating. Recognizing technology innovations by consumers and the capital market boosts management confidence in doubling down on tech efforts. The interest in gen AI is expected to remain strong in 2024, with a focus on leveraging innovation responsibly while addressing known risks. You Might Be Interested In Sony’s WH-CH520 Headphones: Up to 50 Hours of Battery Life and DSEE Sound Enhancement! Adani’s Revenue Surges with Bangladesh’s Power Purchase Surprise Downturn: China’s Factory PMI Weaker Than Expected in November CES 2023: Samsung announces SmartThings Station Omnicom Announces Pricing of €600 Million Senior Notes Offering Goldman Sachs Undergoes Leadership Transition as John Rogers Passes the Torch to Russell Horowitz