The news: US banks have “some work to do” before they can embrace AI-powered tools like ChatGPT, according to Bank of America CEO Brian Moynihan.
- Speaking virtually at Sydney's AFR Business Summit, Moynihan acknowledged the technology’s usefulness but cautioned banks that external generative AI tech must be “applied correctly,” per Bloomberg.
- The CEO added that inaccuracy, a dearth of data-based responses, and the risk of cyber attacks presented challenges for ChatGPT’s use in banking.
Banks approach AI apps with caution: Bank of America has already banned staff from business use of ChatGPT. Other banks have done the same, including:
- JPMorgan
- Citi
- Goldman Sachs
- Wells Fargo
- Deutsche Bank
How can banks prepare for AI’s rise? Despite wariness around using third-party AI technologies, banks are investing heavily in the space. Retail banks are forecast to spend $4.9 billion on AI platforms by 2024, growing 21.8% compounded annually from 2019, per GlobalData research.
However, it will take time for banks to fully benefit from the tech’s disruptive impact. Here’s how lenders can embrace generative AI:
- Educate employees. Banks should familiarize stakeholders with generative AI and its impact on banking. The tech has the revolutionary potential to create data for a variety of sophisticated applications.
- Keep tech up to date. Whether they’re building tech in-house or outsourcing from third parties, banks need to invest in and budget for generative AI.
- Work out its uses. Lenders should test and evaluate different use cases for generative AI, such as fraud detection, virtual assistants, personalized offers, and wealth planning.
- Develop a strategy. Banks need to be forward-thinking, building clear plans for integrating generative AI into their operations, including implementation, governance, and risk management planning.
- Brace for regulation. AI is a relatively new technology and it comes with risks that regulators are still identifying as they determine how to oversee the space. Financial institutions interested in AI-powered tools must prepare for regulations that will likely evolve as AI becomes more commonplace.