The AI Revolution in Financial Services: The Time to Act is Now 

by | Sep 26, 2023

Share this article

Written by Nathan Stevenson, CEO, ForwardLane 

Artificial intelligence (AI) has long been used in the financial sector, but the advances in generative AI and its move into the mainstream is a turning point for its application. According to McKinsey, if use cases were fully implemented, generative AI could add $200-$340 billion to global annual banking revenues. A step-change is afoot as financial institutions seek to make the most of the AI gold rush, and though there are technical and regulatory hurdles, we are merely on the cusp of a new AI epoch. The importance of this moment in history is significant. It necessitates preparation from senior management and boards for long-term structural changes that AI is set to usher in. 

Information Consumption and Accessibility 

 
 

For generations, the trade-off between accuracy and depth has meant that complex information has to be collated and analysed by people. In the computer age, this started with spreadsheets, later progressing to search interfaces and dynamic dashboards.   

Now, generative AI is sparking another shift and revolutionising the way we consume, interact with, and access information. In terms of human-computer interaction, AI technologies like GPT-4 from OpenAI have advanced reasoning capabilities, providing real-life, contextually relevant responses. We can now converse with AI like we would with another human, making information access and data interrogation effortless.  

Data, once the realm of data scientists, is now becoming accessible to business users. They can ask questions in plain language and get answers instantly, fostering a new paradigm in data-driven decision-making. What is more, this capability is readily available across billions of devices globally at minimal cost.   

 

Implications for Financial Institutions 

As McKinsey notes, the global banking industry is well-placed for the integration of generative AI applications. Institutions typically have extensive, complex data and IT architectures and employ large IT and data science teams to manage these. They also have large customer-facing workforces, and produce a lot of documentation, all of which can benefit from generative AI.  

This democratisation of data, therefore, brings with it significant implications for financial institutions, their processes, their employees. For if the data is now in the hands of the end user, the obvious question is what are we paying data scientists for?  

 

Inevitably, the shift to generative AI will lead to a “hollowing out” of traditional IT structures. Many organisational layers are likely to be removed or reshaped, and resources will need to be redistributed to manage the outputs and answers provided by AI. As we embrace this new paradigm, we’ll witness a decrease in demand for data analyst and IT roles that involve information assembly and aggregation. Instead, the role of IT and data will transition to orchestrating the building blocks, curating the tools for articulating and communicating the answers, and putting in place the infrastructure and resources needed to deliver the capabilities of generative AI.  

There will also be organisational changes elsewhere. Customer services roles, like those in call centres, will be reshaped as AI takes over the straightforward, lower-level, tasks, leading to increased efficiency and accuracy. While those in higher-skilled roles, such as financial advisors will increasingly use generative AI tools as a co-pilot, to provide a more personalised service to clients, as well as for writing emails and other client communications, thus boosting customer satisfaction.  

This shift will escalate the need for skilled strategic, tactical, and creative experience-focused workers who can leverage data and analytics technologies and are comfortable working in a human-AI hybrid workplace.  

 

Facing the Future 

The speed at which AI is transforming the workplace is remarkable. It’s not an exaggeration to say that the workplace in three years will be substantially different than that of today. Financial services leaders must be proactive in reimagining their workforce to avoid painful transitions. Rather than resisting the change, it’s time to embrace AI’s potential and understand how the financial sector can leverage AI to redefine information access, reshape job roles, and remodel workplaces. And with tight labour markets and skills shortages persisting in many markets, now is a particularly opportune time to rethink what the future workforce will look like.  

Those financial institutions that take the initiative and take a more strategic view of how generative AI tools can be embedded in workflows, will be best placed to understand the future shape of their organisation and future skills requirements. They will also be on the front foot when it comes to putting in place the requisite training and upskilling programmes to prepare their workforce for this new future.  

 

The AI moment we are experiencing now will shape the future of the financial sector and redefine the way we work, communicate, and make decisions. It’s a wake-up call for the industry to seize the opportunities it offers and prepare for a future driven by AI. The AI revolution in finance has begun; let’s embrace it and proactively take those steps to reimagine the workforce of the future.  

Share this article

Related articles

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, designed to fit perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode

x