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December 14, 2023

Gen AI: what financial and insurance execs need to know

By understanding the opportunities and risks of generative AI, financial institutions and insurers can take the first steps toward benefiting from this powerful technology.

When it comes to generative AI, many financial institutions and insurance companies have been outspoken with where they see its potential.

Insurer Lemonade, for example, says it has prototyped dozens of business processes and expects financial impacts from generative AI by 2024. ABN Amro is piloting a customer service application that helps employees gather data to assist with queries and avoid repetitive questions. Many banks and insurers seem to believe the technology will alter the longstanding ways in which they operate, whether it’s slashing onboarding times, hyper-personalizing offers or fast-forwarding application development.

Nonetheless, in the intensely regulated financial services and insurance world, the exuberance must be balanced with due diligence. Generative AI’s promise—personal and organizational productivity improvement at scale—must be weighed against the risks: operational, financial, reputational and regulatory.

In our new report, we’ve explored the opportunities and risks of generative AI in banking, credit cards and payments, wealth management and insurance. Key takeaways in the report include:

  • Major financial institutions and fintechs have already begun generative AI experimentation. Executives can learn from the over a dozen institutions that have provided details on how they’re using generative AI across legal and IT, client and advisory services, marketing and research, customer experience and more.

  • There’s potential for dramatic productivity gains, especially when generative AI is used in certain areas, like sales, marketing, software engineering and customer operations.

  • The risks are often as great as the rewards. We’ve defined 11 risks that financial institutions need to overcome to realize generative AI gains.

Generative AI’s capabilities are accelerating rapidly. It’s time now for financial and insurance executives to move past the hype and understand the reality of generative AI.

For a full depiction of generative AI opportunities and risks, see our report, “Capitalizing on generative AI,” or contact us.

Ed Merchant

Head of BFS Consulting Americas

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Manan Gauba

Head of Strategy and Partnerships, BFS

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Craig Weber

Head of Strategy, Insurance

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