Much has been written about the impact that generative AI technologies and services like ChatGPT will have on a wide range of industries, including financial services. But despite the hype around generative AI; when Can consumers use services like ChatGPT within financial services websites and mobile apps?
Many of the largest financial services companies have announced that they are working on generative AI initiatives internally and/or for their customers. For example, JPMorgan ChaseJPM is developing a generative AI investment advisor, Morgan StanleyMS is piloting multiple generative AI projects, Citi has been working on a generative AI project for at least three years, and Visa is one of his We are launching a billion dollar generative AI venture fund. However, only a limited number of financial services companies have actually deployed generative AI assistants like Live ChatGPT to support their customer experience.
As I have learned from working with clients and speaking with peers in the financial services industry, 2024 is shaping up to be the year that generative AI in financial services moves from theory to reality. Powerful generative AI assistants will begin appearing within consumer financial services websites and apps. This is important because the financial services sector currently only offers very basic chatbot assistants that operate on outdated technology. The transition to generative AI assistants will fundamentally change the way the average consumer manages their money and interacts with financial services companies.
This article begins with a deep dive into why the move to generative AI assistants will have such a big impact on the financial services industry. Next, we'll dive deeper into the question of “when” and when various financial services industries will start offering generative AI assistants for their customers.
Why will the move to generative AI assistants change the financial services industry?
The financial services industry is now offering basic chatbot assistants to consumers. The average financial services chatbot can only handle simple questions about account services.
The average financial services chatbot struggles to explain financial concepts, fails to assist with financial planning and budgeting, and does not offer investment advice or assistance. Chatbots in the industry are primarily designed to address relatively simple customer support needs and are not sophisticated enough to act as true assistants or advisors.
In contrast, generative AI assistants can provide fairly accurate answers to a wide range of financial questions. Generative AI assistants can explain financial concepts and rules, assist with budgeting and financial planning, and even provide high-level advice and recommendations when directed in the right way. Generative AI assistants can also conduct conversations in a somewhat natural way and can refer to previous comments and discussions. The rigid rules-based chatbots currently offered by the industry are unable to conduct conversations or understand references to previous discussions.
Some might argue that generative AI assistants for customers will create the first true “robo” advisors, as this technology actually works like a true automated financial assistant. For example, Google's Bard-generated AI assistant can handle relatively niche topics like helping San Francisco residents buy a home or providing cross-border tax advice. And generative AI technology will continue to improve over time.
The transition to more powerful generative AI assistants will revolutionize the financial services industry. Over time, consumers will interact with generative AI financial assistants as their first “port of call” instead of navigating through a website or mobile app. Generative AI can handle simple questions and provide high-level guidance, allowing human experts to focus on more value-added activities.
Given the context of how generative AI will change industries, the question becomes when. When will financial services websites and mobile apps start offering generative AI assistants to their clients?
When will generative AI be introduced to your brokerage, cards, and bank accounts?
Broadly speaking, the banking, credit card, and independent securities industries are more sensitive to competitive pressures and new technologies. These financial services industries tend to react relatively quickly to disruptions, such as the rise of zero-commission transactions and innovative credit card perks that gain market share.
Perhaps unsurprisingly, the two most prominent examples are: live Generative AI assistants for clients in financial services come from these three financial services areas. American neobroker Public.com (Alpha) and Dutch neobank Bunku (Fin) have both launched generative AI assistants. Publix's Alpha assistant can generate impressive commentary, especially on stocks and markets. Bunq's Fin Assistant can perform detailed analysis of a client's account, including granularity down to the level of how much the client spent on pizza in the previous year.
Wells Fargo (Fargo) and American Fintech Dave (DaveGPT) have also announced that they have developed virtual assistants using generative AI, but in my testing, these two assistants are fairly basic and primarily perform simple tasks. We can only handle customer service related questions. Most likely, the capabilities of both assistants will become even more advanced during his 2024 year.
In 2024, more banks, brokerages, and credit card companies are expected to deploy customer-facing generative AI assistants. By the end of the year, these sectors will move from a few examples to more widespread adoption, creating strong competitive pressure for laggards to respond with their own offerings. Unique generative AI assistant.
Jason Mikula, publisher of Fintech Business Weekly, said:Excitement about AI-powered generation tools is evident with many financial services companies discussing the feature on earnings calls or launching beta features, but there is also a lot of bottom-up feedback from end consumers. This is also evident in the adoption of ChatGPT has gained over 1 million users in just 5 days since its launch. There are always opportunities, risks and barriers for financial services companies. In particular, companies should be careful about how assistants respond to questions asking for advice or recommendations.”
When will generative AI be introduced to insurance, financial advisors, and workplace retirement plans?
Generally speaking, the insurance, workplace retirement plans, and traditional financial advisor industries cannot respond quickly to major technology changes. All three industries typically involve strong personal relationships and very slow sales cycles, resulting in less competitive pressure to keep up with the latest technological innovations.
That said, each of these financial industries would greatly benefit from generative AI assistants, as each of these products comes at a significant cost to service and support. Generative AI assistants that can talk to customers and provide advanced guidance will ease the burden of day-to-day services for insurance agents, financial advisors, and plan administrators.
Overall, we expect movement in these three financial services industries to slow. Although there may be exceptions for early adopters, it will be several years before the average insurance and workplace retirement plan has a powerful generative AI assistant built into its website or mobile app.
Generative AI is poised to transform financial services in 2024, and financial services companies should start the process of building generative AI assistants now
Generative AI assistants are coming to financial services. It’s not a matter of “if,” it’s a matter of when, and 2024 is shaping up to be the year of generative AI in financial services. Financial services companies that have not yet begun the process of developing generative AI assistants for their customers should start the process now.
Companies can spend months coordinating all stakeholders on design and approach before a single line of code can be written. Therefore, it is better to start this process now than to fight competitive pressures later this year. To help companies in this endeavor, we will be publishing a follow-up article next week outlining how financial services companies can build generative AI assistants.
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