Could GenAI be the BFS Industry’s Apple Moment?
Tesla, Apple, Amazon—these industry giants have one thing in common: Their groundbreaking launches and business models directly impact our daily lives.
For Apple, it was the iPhone, which reshaped nearly every aspect of society. Tesla's first electric vehicle (EV) redefined customer perception of what an EV could be. Amazon, meanwhile, is notable for its breadth—somehow, across retail, groceries, manufacturing, and television, Amazon has maintained its dedication to customer experience.
I don’t know about you, but I’m eagerly awaiting the next category breakthrough. I’d say it would come from a pioneering brand in banking and financial services (BFS) powered by Generative AI (GenAI). GenAI is already transforming everything from creative ideation and music to healthcare, medicine, insurance, manufacturing, and so much more. The BFS industry still weighed down by paperwork and manual processes, has been historically slow to adopt new technologies. However, I believe that GenAI could be the iPhone moment that BFS needs.
Adopting GenAI won’t be simple. BFS organizations will need to take a bold step forward, leveraging GenAI to transform their businesses, speed up processes, find new efficiencies, and deliver better customer experiences. Transformation is never easy, but it’s clear to me that we are on the cusp of an opportunity that will define our industry for decades to come.
Generative AI in Banking: How It's Reshaping the BFS Landscape
GenAI will impact every sector broadly, but banking, high-tech, and life sciences are poised to lead the way. McKinsey & Company predicts that GenAI could generate $306 billion in new value for retail banking and $321 billion for corporate banking. These numbers are just too big to dismiss, and I’m advising my BFS clients to take a serious look at the potential offered by GenAI.
Generative AI in banking is transforming financial services, optimizing operations, and enhancing customer interactions. For BFS, the pace of digitization is changing. A few years ago, most retail banks weren’t even thinking about expanding digital capabilities beyond the most basic use cases. Now, 81% of industry survey respondents report that digital transformation was one of the top two retail banking trends of 2023. This trend is undeniable: Goldman Sachs is already experimenting with GenAI to enable its developers to automatically generate and test software code, while Morgan Stanley is testing an OpenAI-powered chatbot to help its financial advisors.
As the rest of the industry watches these major players move forward, it’s important to examine the opportunities and risks of GenAI implementation. At Firstsource, we’re building the GenAI roadmap with care. With the stakes this high, there’s no room for error, and we are making sure to examine every angle before recommending any path forward for our partners. For example, some companies are looking to leverage synthetic data generated by AI to improve their credit risk decision-making processes. Synthetic data can simulate customer behavior, allowing banks to anticipate client needs and make more informed credit decisions. However, this approach raises some concerns surrounding personal data privacy, data quality, and over-reliance on data that lacks real-world nuance.
Despite these concerns, ignoring GenAI is not an option. The competitive landscape is shifting and BFS institutions need to act. According to 70% of industry survey respondents, at least two or more fintech or big tech firms could become top 10 financial services providers in the next 6 years. Forbes also reports that digital and cryptocurrencies are again on the radar for BFS, with over “130 countries...reported to be investigating the use or adoption of central bank digital currencies (CBDCs).”
Digital-first companies and digital currencies will create new industry norms and reset consumer expectations. These are seismic changes, and I am closely watching the horizon. Companies that hope to survive this change must assess their resources, processes, and partnerships. The best partners will be those who understand where GenAI can make the most positive impact in the unique ecosystem of the banking sector.
Top Generative AI Use Cases for Banks & Financial Services
When I think about the applications of GenAI that will deliver business value for the BFS industry, a few use cases come to mind immediately:
- Customer Insights: By combining real-time customer data with historical analysis, financial institutions can predict customer intent and direct requests to appropriate channels.
- Personalized Recommendations: Banks can use data to offer personalized recommendations for life events like marriages, births, career changes, and retirement.
- Enhanced Credit-Risk Decisions: Synthetic data generated by AI can simulate customer behaviors and improve credit-risk assessments.
Improving processes and the banking experience naturally boosts customer loyalty, too– and that makes all the difference when the competition is so fierce. This is one of the key benefits we have seen through Firstsource’s relAI platforms, which leverage human-centric AI engines, GenAI, and machine learning to capture real-time customer data and use it to power intelligent, personalized interactions. By identifying hidden inefficiencies, bottlenecks, and process variations in the customer experience, we can perform “what if” scenarios that focus resources and improve process resilience, ultimately impacting customer retention. We’re iterating on these discoveries at Firstsource because we know that, in the end, customer outcomes are what matter.
What GenAI Can Bring: Customer-Centric Models
Using GenAI goes far beyond improving customer experience - it is about customer-centricity. Just as the core of Amazon’s business is centered around being customer-first, BFS organizations must prioritize customer journeys. To implement GenAI effectively, companies have to think about their customers not just as interactions and transactions but from end-to-end. That’s where the real transformation opportunity lies and where Firstsource is channeling its innovation. We believe that every part of your business impacts customer retention and experience: from risk assessment to back-office automation, from mortgage originations to ATM withdrawals, and from customer service to organizational restructuring.
Customer-centric models drive innovation. With accurate and clean customer data as a foundation, banks, and financial institutions can offer their customers more personalization, more banking security, and a better overall experience. Predictive analytics powered by GenAI can detect unusual activity or behavior early, alerting customers before problems get out of hand. Banks can create personalized offerings to suit client life events such as marriages or home purchases without compromising on business value. Wealth management companies can customize investment strategies or retirement planning services depending on a customer’s profile, appealing especially to younger customers who are used to customized experiences. These changes, powered by GenAI, will keep your company competitive, and keep your customers coming back.
Finding the Right Partner for GenAI in BFS
It is critical for BFS organizations to find partners dedicated to developing these types of practical use cases for GenAI. As someone who advocates for clients, I’ve always believed in keeping our technology commitments authentic and safe while also being agile enough to serve their needs.
As long as they have the technology expertise, business process management providers are ideal sources for GenAI innovation. However, GenAI use cases must be tailored specifically to banking and financial services considering the complexity of and regulations surrounding financial institutions.
Firstsource has spent 20+ years thinking deeply about the BFS industry, and we are acting on that knowledge to create a sandbox of GenAI applications centered around call screening and chat screening. We are trying to answer questions like: How can we help a credit risk assessor make the right decision? How can we help back-office operations save time? How can we make seemingly impossible outcomes happen — quickly, repeatedly, and sustainably?
Before finalizing use cases, we look deeply at a few important areas:
- Intrusiveness - How intrusive is our use case? Even the brightest ideas about GenAI applications may never be implemented if the concept requires a significant commitment from a client—like access to the client’s systems and datasets. We need to minimize a client’s commitment so GenAI can be adopted without disturbing other processes.
- Starting Points - We also work hard to identify the right starting point. Take documents, for example. The Digital Banking Report noted that only 11% of bank executives surveyed are using AI for document analysis and data extraction. Could we develop a use case around leveraging GenAI to process and classify documentation, extract key terms, and create new contracts to lower the costs of that process? By identifying a practical starting point for implementing GenAI, we can show clients that they are early adopters of a GenAI revolution, not part of an experiment.
Testing and refining these challenges are the core of the Firstsource model. Once we confirm that our use cases are nonintrusive and that we have a powerful starting point, we can move it from the sandbox to the market. Then, we work collaboratively (and quickly) to deliver the value you need. Our 20-year partnership with a major U.K. bank is proof that this method works, blending modern technology with a client-first mindset for sustainable outcomes.
The Rise of the Transformation Provider
At Firstsource, we know that to create value for BFS organizations, we must intimately understand industry shifts and customer needs. As a result, our role has evolved. We are no longer just a capacity provider; we are now acting as a business transformation partner.
- Collaborative and Compliant Transformation: Our hyper-focused domain specialists are collaborating with BFS organizations to understand their challenges and revolutionising lending. We employ GenAI to automate processes while staying compliant with KYC norms and Anti Money Laundering standards. According to NVIDIA’s State of AI in Financial Services: 2024 Trends” report, 91% of financial institutions are assessing or deploying AI, showing just how pivotal these technologies have become.
- Enhanced Loan Origination: We enhance loan origination by automating validation, credit analysis, and decision-making, supported by lifecycle management for seamless performance.
- Streamlined Post-Close Workflows: We simplify post-close workflows by digitizing documents and using Robotic Process Automation (RPA) and GenAI for tasks like collateral management and servicing reviews.
- Efficient Audits: Our audit platforms help initiate reviews in 48 hrs, cutting costs by up to 30%, and ensure compliance with real-time insights and easy-to-use checklists.
- Improved Customer Experience: Our GenAI solutions enhance customer interactions and back-office operations with features like cognitive search and digital loan boarding - boosting efficiency and customer experience. Klarna, a leading global payments and shopping service, managed to reduce resolution time from 11 minutes to 2 minutes using AI, underscoring its potential to transform client interactions.
- Mortgage LLM: Part of our Firstsource relAI suite, Mortgage LLM is a domain-specific large language model that speeds up the loan application and fulfilment process, for faster and smarter outcomes.
So, we have embraced GenAI and innovative AI solutions to help BFS organizations simplify financial processes, improve service quality, boost customer engagement, and build trust—all while driving sustainable growth in an ever-changing market.
A Moment of Opportunity for BFS
GenAI represents a powerful opportunity for BFS, much like the iPhone did for mobile technology. However, though Tesla’s EVs, the iPhone, and Amazon are all acknowledged as game-changing innovations today, it’s worth remembering that they didn’t immediately reshape the world. Smartphones didn’t become ubiquitous until nearly 10 years after the release of the iPhone. The cataclysmic shift brought by GenAI has already begun, but it is uncertain how long it will take to fully materialize.
For BFS organizations, the choice is clear: Embrace GenAI now or risk falling behind. This moment is an unparalleled opportunity for growth and meaningful transformation that our industry may never see again. Again.
If you're interested in learning more about our solutions, visit Firstsource relAI, where responsible AI meets a team of experts responsible for making business results happen smarter, faster.