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Monday, April 15, 2024

Groundbreaking Study Highlights Generative AI’s Impact on Financial Sector

Fifty One Degrees has unveiled a research study demonstrating that a vast majority, 84.6%, of operations within banks, insurers, FinTechs, and other entities in the Financial Services sector could significantly benefit from AI technology, potentially contributing an extra £41.7bn to the sector’s economic output.

The study indicates that deploying AI could enhance the efficiency of 8 out of 10 tasks, while slightly more than half could see a marked improvement in quality. GenerativeAI (GenAI), identified as the most potent AI technology for financial services, could positively impact 74.9% of tasks. Notably, the most substantial efficiency improvements are anticipated in internally focused tasks and processes, with a 41% gain, compared to a 34% gain in customer-facing tasks. Furthermore, GenAI is projected to boost the financial services sector’s economic output by up to 15%, equating to an additional £41.7bn.

Fifty One Degrees, an esteemed AI consultancy, has today released a pivotal research study revealing that nearly 85% of tasks and activities within financial services firms stand to gain from the integration of generative AI technology.

This meticulous study examined 311 tasks and activities across fourteen distinct functions within banking, insurance, and financial services firms, assessing the potential benefits of various AI technologies and estimating the extent of these benefits.

GenAI has emerged as the leading AI technology with significant potential to transform the Financial Services sector.

The findings suggest that GenAI Assistants, designed to aid team members in specific functional areas, could positively influence three-quarters of the tasks undertaken in financial and insurance firms. These assistants, specialized in particular policies, procedures, and regulations, are particularly effective in areas that process substantial volumes of natural language data, such as Compliance, Legal, Risk Management, and Underwriting. In some instances, AI assistants could enhance employee efficiency or automate workflows completely.

Moreover, the study identified other AI tools, often driven by Generative AI and Large Language Models, as the subsequent most impactful technologies, capable of creating efficiencies in 39% of activities. These tools encompass a range of applications, including AI-driven training programs, legal tools, financial tools, and more.

Teams focused on policy, data, technology, or customer relations are poised to experience the most significant benefits.

The analysis indicated that functions such as Analytics & Data Science, Technology, Customer Services, and Underwriting could see both an increase in efficiency and an enhancement in the quality of work through the adoption of GenAI. While areas like Compliance, Enterprise Risk, and Legal are expected to benefit primarily from efficiency gains, the improvement in work quality may not be as pronounced.

The economic implications of GenAI within the banking and financial services realms are profound.

Current research estimates that Generative AI could generate between $2.6 trillion and $4.4 trillion annually for global businesses. Specifically, within the Financial Services and Insurance sectors, this could translate to $200 billion to $340 billion, or 9 to 15 per cent of operational profits. With the UK’s financial and insurance industries contributing £278bn to economic output, a 15% uplift from GenAI could result in a remarkable additional £41.7bn. Given the financial sector’s substantial role in the UK economy, accounting for 8.3% of it and employing 2.5 million people, advancements in this field could have widespread effects on the broader economy.

Nick Harding, co-founder and CEO of Fifty One Degrees, shared his insights: “The UK financial services industry is a powerhouse that fuels the local economy by servicing consumers and businesses, but is also the UK’s biggest export. Enabling this industry, which is so critical to our collective success, to remain at the forefront of technology is something we’re passionate about. Assertively adopting generative AI will enable UK financial services to grow further, enabling this vital sector to remain a global leader.

And this is just the beginning. This study represents the generative AI technology and tools that are available today. What we’ve experienced is rapid development and evolution of the technology and its capabilities, meaning the opportunity for businesses to benefit will only increase.”

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