Technology Developments in GenAI Are Transforming Financial Institutions and Their Marketing Strategies
Understanding Technology Developments in GenAI
Banks face challenges in deploying generative artificial intelligence (GenAI) effectively, resulting in missed monetisation opportunities. Recent technology developments show that financial institutions can learn from industries where GenAI thrives, particularly in marketing and client engagement.
Current Status of GenAI in Financial Institutions
Although financial institutions have utilized GenAI in the back office for processes like fraud management, many are only starting to experiment with it in client-facing services. A study by the Hong Kong Monetary Authority (HKMA) revealed that only two out of 16 institutions use GenAI for tailored marketing or customer engagement in a meaningful way.
- Higher Revenue Potential: GenAI could increase revenue by about 5%.
- Cost Savings: By embracing GenAI, banks could reduce customer service costs by 20-30% over two to three years.
Challenges in Implementing GenAI
Implementing GenAI requires significant changes within financial institutions, as noted by experts from Bain. Priscilla Dell’Orto highlighted the necessity of rewiring job functions from back office to frontline to achieve GenAI's full potential.
Regulatory Landscape and Future Directions
The HKMA's recent guidelines on GenAI address governance, transparency, data privacy, and protection, fostering a collaborative environment between financial institutions and regulators. This relationship is crucial for innovation in the use of GenAI.
Personalization as Key to Success
Financial institutions can harness internal and external data sources to provide personalized marketing content, avoiding the one-size-fits-all approach. A survey indicated strong acceptance of AI in guiding wealth management decisions among affluent clients.
Conclusion: Unlocking GenAI's Full Potential
As financial services firms realize the substantial benefits of GenAI, the shift toward personalized marketing strategies becomes more pronounced, enhancing the overall client experience while boosting profitability.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.