It is quite certain that generative AI technology and services like ChatGPT have been creating a massive disruption across industries, including the financial services domain. But, with all of the hype around generative AI, the biggest question is when will consumers be able to access a ChatGPT-like service through their financial services website and mobile app?
And focused towards internal and/or external clients, many of the world's top financial institutions have indicated that they are developing generative AI efforts. For instance, JPMorgan Chase JPM +0.9% is creating a generative AI investment advisor, Morgan Stanley MS 0.0% is testing various generative AI projects, Citi has been working on generative AI projects for at least three years, Visa has announced a $100 million generative AI innovation fund, and so on. As of February 2024, only a few financial services firms had installed a live ChatGPT-like generative AI assistant to enhance their client experience.
2024 is shaping up to be the year that generative AI in financial services goes from theory to reality, as we observe financial institutions clinging more towards integrating generative AI in their overall operations. With this, we can expect that powerful generative AI assistants will begin to appear on consumers' financial services websites and apps. This is really significant as the financial services sector now only provides very basic chatbot helpers based on outmoded technologies. Furthermore, the transition to generative AI assistants will radically alter how the average consumer manages their finances and interacts with financial institutions.
We'll now delve into the "when" topic in greater detail, as well as a potential timeframe for when various financial services industries will begin deploying client-facing generative AI assistants:
Why will generative AI assistants revolutionize the financial services industry?
The financial services industry presently provides users with basic chatbot assistants. The average financial service chatbot can only answer simple account-related questions.
The average financial services chatbot struggles to explain financial concepts, cannot aid with financial planning and budgeting, and does not offer advise or assistance with investing. The industry's chatbots are largely geared to handle simple customer care requests and are not intelligent enough to function as a true assistant or advisor.
In contrast, generative AI assistants can respond pretty accurately to a wide range of financial questions. Generative AI assistants can explain financial concepts/rules, assist with budgeting and financial planning, and even provide high-level advise and recommendations when prompted appropriately. Generative AI assistants may also hold a conversation in a natural manner and refer to past remarks and conversations. The industry's current rules-based chatbots are unable to hold a conversation or grasp references to past discussions.
One could argue that client-facing generative AI assistants will be the first true "robo" advisors, as this technology can function more like an automated financial assistant. For example, Google's Bard generative AI assistant can assist San Francisco residents with home shopping or offer cross-border tax guidance. And generative AI technology will only improve with time.
The transition to more powerful generative AI assistants will have a dramatic impact on the financial services industry. Consumers are likely to interact with their generative AI financial assistant as the initial "port of call" over time, rather than accessing the website or smartphone application. Generative AI will be able to handle simple questions and provide high-level suggestions, allowing human experts to focus on more valuable tasks.
So, with this background on how generative AI will transform the industry, the issue becomes "when." When will financial services websites and mobile apps begin to give generative AI assistants to customers?
“Like with all technological revolutions, I expect there to be significant impact on jobs, but exactly what that impact looks like is very difficult to predict…I believe that there will be far greater jobs on the other side of this, and that the jobs of today will get better…I think it’s important to understand and think about GPT-4 as a tool, not a creature, which is easy to get confused, and it’s a tool that people have a great deal of control over and how they use it. And second, GPT-4 and other systems like it are good at doing tasks, not jobs,” - Sam Altman, CEO at OpenAI.
When will your bank, card, and brokerage accounts be able to use generative AI?
In general, the credit card, banking, and self-directed brokerage sectors respond more quickly to technological advancements and pressure from the competition. These verticals in the financial services industry have a history of responding fast to disruptions, including the emergence of zero fee trading or creative credit card benefits that take market share.
These three financial services industries are home to the two most well-known instances of live, client-facing generative AI assistants in the industry, which may come as no surprise. Both Dutch bank Neobank Bunq (Finn) and American neobroker Public.com (Alpha) have introduced generative AI helpers. Public's Alpha helper is particularly good at producing insightful market and stock analysis. The client's account can be thoroughly examined by Bunq's Finn assistant, down to the specifics of how much was spent on pizza the previous year.
Both American Fintech Dave (DaveGPT) and Wells Fargo (Fargo) have also revealed that they have created a virtual assistant utilizing generative AI. However, based on my tests, these two assistants are rather primitive and can only deal with straightforward customer service-related inquiries. Over the course of 2024, both assistants' capability should presumably grow.
In 2024, more bank, brokerage, and credit card companies should introduce client-facing generative AI assistants. These industries will extend from a small number of examples to a larger number by the end of the year, which will put intense pressure on those who are lagging behind to develop their own generative AI helper.
"The excitement about generative AI-powered tools is evident, both in the number of financial services firms discussing the capabilities in earnings calls and launching beta features, but also in bottoms-up adoption from end consumers," states Fintech Business Weekly Publisher Jason Mikula. Within five days of its public launch, ChatGPT had over a million members. As always, there are possibilities, dangers, and barriers for financial services organizations. Businesses need to be especially cautious about how their assistant responds to inquiries for suggestions and advice.
When will financial advisors, insurance companies, and workplace retirement plans use generative AI?
In general, the insurance, workplace retirement plan, and traditional financial advisor sectors take a while to adapt to significant advancements in technology. There is less competitive pressure to react to the newest technical advancement in any of these three verticals because they are usually characterized by strong human ties and/or very slow sales cycles.
Nevertheless, given that service and support are major expenses for each of these products, generative AI assistants would be extremely beneficial to all of these financial sectors. Insurance agents, financial consultants, and plan administrators would have less work to do on a daily basis if they had access to a generative AI assistant that could converse with clients and offer high-level advice.
These three financial services verticals should increase more slowly overall. It will probably be a few years before the typical insurance and workplace retirement plan website and mobile app has a strong generative AI assistant, though early adopters might be an exception.
By 2024, generative AI is expected to completely change the financial services industry, so financial services companies need to start developing generative AI assistants now.
Financial services will soon be served by generative AI assistants.So to say, 2024 is looking like the year that generative AI makes its appearance in the financial services industry, wherein, players in the financial services companies need to get started right away on creating a generative AI assistant that can assist clients.
A single line of code may not be produced for several months while your company works to get all stakeholders on board with the design and strategy. Consequently, it is preferable to begin this procedure now rather than later in the year in response to pressure from competitors. I'll be publishing a follow-up essay next week that describes how financial services companies might create a generative AI assistant to aid them in this endeavor.
Some of the Generative AI Developing startups from India who has been pushing boundaries to help businesses reap the benefits out of Generative AI includes GeekyAnts (Founder - Sanket Sahu), Systango (Founder - Vinita Rathi), ProCogia (Founder- Mehar Pratap Singh), HestaBit (Founder - Harshvardhan Lakhera - Co- Founder and CEO), and MachineHack (Founder - Bhasker Gupta).
“Like with all technological revolutions, I expect there to be significant impact on jobs, but exactly what that impact looks like is very difficult to predict…I believe that there will be far greater jobs on the other side of this, and that the jobs of today will get better…I think it’s important to understand and think about GPT-4 as a tool, not a creature, which is easy to get confused, and it’s a tool that people have a great deal of control over and how they use it. And second, GPT-4 and other systems like it are good at doing tasks, not jobs,” - Sam Altman, CEO at OpenAI.
