Generative artificial intelligence (AI) is a branch of AI that can create novel and diverse content, such as images, text, music, and code. It has the potential to transform various industries, including banking, by enabling new ways of engaging customers, optimizing operations, and generating revenue. According to a recent report by McKinsey & Company, gen AI could bring between $200 billion to $340 billion in value to the banking sector by 2025.
Gen AI can enhance customer experience and loyalty
One of the main applications of gen AI in banking is to improve customer experience and loyalty. Gen AI can help banks create personalized and relevant content for their customers, such as tailored financial advice, customized product recommendations, and engaging marketing campaigns. For example, gen AI can generate natural language summaries of complex financial documents, such as loan agreements, credit reports, and investment portfolios, to help customers understand their financial situation and make informed decisions. Gen AI can also create realistic and interactive avatars that can serve as virtual assistants or advisors for customers, providing them with 24/7 support and guidance.
By using gen AI to deliver customized and engaging content, banks can increase customer satisfaction, retention, and loyalty, as well as attract new customers and cross-sell products and services. McKinsey estimates that gen AI can generate between $70 billion to $120 billion in value for banks by enhancing customer experience and loyalty.
Gen AI can optimize operations and reduce costs
Another application of gen AI in banking is to optimize operations and reduce costs. Gen AI can help banks automate and streamline various processes, such as data entry, document verification, fraud detection, and risk management. For example, gen AI can generate synthetic data that can be used to train and test AI models, reducing the need for real data and ensuring data privacy and quality. Gen AI can also create realistic and diverse scenarios that can be used to simulate and stress-test different situations, such as market fluctuations, cyberattacks, and regulatory changes, to help banks assess and mitigate risks.
By using gen AI to automate and streamline operations, banks can improve efficiency, accuracy, and compliance, as well as reduce operational costs and errors. McKinsey estimates that gen AI can generate between $90 billion to $140 billion in value for banks by optimizing operations and reducing costs.
Gen AI can generate new revenue streams and business models
A third application of gen AI in banking is to generate new revenue streams and business models. Gen AI can help banks create novel and innovative products and services, such as digital art, music, games, and code, that can be sold or licensed to customers or other businesses. For example, gen AI can generate unique and personalized digital artworks or music tracks that can be used as gifts, rewards, or investments by customers. Gen AI can also create code snippets or software components that can be used by developers or businesses to build or enhance their applications.
By using gen AI to create novel and innovative products and services, banks can diversify their revenue sources, expand their customer base, and differentiate themselves from competitors. McKinsey estimates that gen AI can generate between $40 billion to $80 billion in value for banks by generating new revenue streams and business models.
Gen AI requires strategic and ethical considerations
While gen AI offers significant opportunities for banks, it also poses some challenges and risks that need to be addressed. Gen AI requires a high level of technical expertise, data quality, and computational resources, which may limit its adoption and scalability. Gen AI also raises some ethical and social issues, such as the potential for misuse, abuse, or manipulation of gen AI-generated content, as well as the impact of gen AI on human creativity, identity, and employment. Therefore, banks need to adopt a strategic and ethical approach to gen AI, by aligning it with their business goals and values, ensuring its quality and security, and engaging with stakeholders and regulators.
Gen AI is a powerful and disruptive technology that can transform the banking industry. By using gen AI to enhance customer experience and loyalty, optimize operations and reduce costs, and generate new revenue streams and business models, banks can unlock between $200 billion to $340 billion in value by 2025. However, banks also need to consider the technical, ethical, and social implications of gen AI, and adopt a strategic and ethical approach to gen AI.
