Banking, alongside plenty of other industries, is being swept up in the generative AI whirlwind. But is it for the better?

As with most technological advances, these new applications have pros and cons, especially for banking.

We’re firm believers in understanding these things before jumping on the virtual bandwagon, so it’s important to recognize the pitfalls of incorporating gen AI into your daily working routine. Here are some pointers on using AI to (potentially) revolutionize your processes.

How does Gen AI work in banking?

In a McKinsey report, estimates show that AI can potentially bring between $200 billion and $340bn a year to the banking sector (up to 5% of the total industry revenue). But how?

Some of the most valued uses of AI in banking include:

• Customer service and support
• Credit approval
• Debt collection
• Personalized marketing and lead generation
• Risk management

While this all sounds exciting and helpful, AI still isn’t perfect, even if it can help you unload undesirable tasks. Here are some pros and cons of Gen AI in banking.

Pros of Gen AI in Banking

Reduce your manual workload

You can introduce Gen AI into your daily work by using it to perform more menial tasks like data entry and document checking. In doing so, you’re minimizing errors and operational costs while freeing up your team to focus on more important tasks.

Improve your customer service

AI isn’t limited to data entry and running numbers, you can also utilize it to create online support chat bots, providing customers 24-hour support. Automating your customer service with AI offers faster response times, improving customer satisfaction.

Heighten your fraud prevention

Because Gen AI makes light work of data analysis, it is the ideal tool to help identify irregular patterns which could be signs of fraud. By using AI to check your bank’s data, you can add another layer of security and reduce potential financial loss.

Cons of AI in Banking

While there are numerous benefits to introducing AI into your banking business, there are a fair share of challenges you’ll face.

Firstly, AI will only give you results if the data you provide is accurate and up to date. If you expect Gen AI to turn a half-full ledger into a comprehensive financial report, you’ll be sorely disappointed. By providing incomplete data sets, you’re likely to have incorrect data as a result, impeding crucial decision-making.

There are also security concerns to consider. Using AI can increase the risk of a data breach, so you must use it with care and respect. Should you experience a data breach, you’ll have to be cautious if you want to comply with GDPR and CCPA regulations. The best thing you can do is continuously monitor and update your bank’s cybersecurity, ensuring the protection of your customers’ private data.

Lastly, do NOT use AI to make important decisions. While you can use it in a loan application process, you should never rely on a computer to make a human judgement. It may be able to analyze data and make initial assessments, but the final say should always come from yourself or another higher-up.

A match made in heaven?

While everyone’s level of understanding Gen AI differs, it pays to know how it could benefit you and your business.

Our upcoming Banking sector summit, or our AI summit, could be a helpful lifeline. You’ll be able to meet people from across your sector and pose your biggest AI questions to a panel of experts.

If you want to book your place, visit our website and check out our calendar of events for the coming year.