Hundreds of financial industry leaders descended on London’s Business Design Centre recently for the MoneyLIVE Summit 2024. Innovations in banking lie at the heart of the gathering, with one particular topic on everyone’s minds: how generative AI can and should be used in financial institutions. 

Generative AI has gained ground in recent years, with some of America’s largest banks, such as Wells Fargo, utilizing AI virtual assistants to be the face of customers’ everyday banking, giving insights into their spending patterns, checking credit scores, paying bills, and offering transaction details.

Conversely, JP Morgan Chase has announced that it is taking a more “measured approach” to generative AI in banking, accelerating its AI capacity “while trying to drown out the hype.” 

Despite varying levels of enthusiasm for adopting AI, there is increasingly a consensus that generative AI is here to stay within financial institutions and that those who do not jump on the bandwagon will be left behind.

Driving the conversation around generative AI in banking, both within and outside of the Business Design Centre’s grounds, are experts like Richard Harmon of Red Hat and Rotem Farkash of Stealth AI.

One of the prominent questions surrounding generative AI in banking is how AI fits into an increasingly complex regulatory environment. Regulatory hurdles, first identified in Europe with the advent of the EU-AI Act, are particularly salient topics among industry leaders. It is these discussions that will be equally important when US lawmakers look to regulate AI in finance.

This complexity is only exacerbated by the relative opacity of new guidelines, with recent legislation only highlighting credit score modeling and risk assessments, largely bypassing issues of data protection and automatic bill payment. 

Implementing AI correctly, as Harmon noted, is essential for banks to increase efficiency and insights into customer behavior while ensuring compliance with local regulations. Selecting generative AI “use cases” that provide immediate value and do not require extensive regulatory approval are crucial for introducing AI.

Leveraging AI for tasks like natural language processing is one way to implement AI correctly. Onboarding processes that once took weeks can now be completed in a fraction of the time, enhancing the customer experience. 

This is what the Bank of America is looking to do with its virtual financial assistant, Erica. While generative AI is yet to be incorporated into the system, the bank is likely to join Wells Fargo as a testing ground for what generative AI can mean for customers. 

Emphasizing the importance of cybersecurity, Farkash argues that AI-driven tools may soon prove indispensable for banks like JPMorgan Chase, which face 45 billion hacking attempts daily. “Integrating automated threat-hunting tools into a bank’s main system ensures real-time response to cyber threats,” Farkash said. 

Banks must also understand their software supply chains and ensure code integrity. Generative AI can simplify this process, and multi-cloud and hybrid cloud services prove effective strategies for reducing “tech debt” and ensuring regulatory compliance.

As Farkash notes, however, this implementation of data-driven compliance through generative AI is not going to happen tomorrow. The use of generative AI in regulation itself requires clear regulatory guidance on AI in the first place, and the US is lagging behind the EU in AI legislation.

Experts agree that AI has the capacity to revolutionize banking. However, a thorough understanding of its best use and the right systems to support its integration are crucial. This will likely result in banks implementing generative AI in granular ways to avoid running foul of regulations, such as in customer service, while lawmakers, lobbyists, and think tanks grapple with large-scale applications, such as credit risk.

However, with experts such as Rotem Farkash and Richard Harmon paving the way for concrete AI applications, we can expect generative AI to be a consistent feature of banking summits and conferences to come.