There is no doubt that Generative AI will transform the business of banking. As processes are more and more augmented and improved by AI, operating procedures will be performed more efficiently, cutting back on time, optimizing resources required and enhancing customer services resulting in improved bottom lines.

The dark side, however, to this evolution is that risks will be more sophisticated and prevalent as criminal elements will paradoxically also have at their disposal the very same generative AI apps used by banks. They could devise new ways to illegally penetrate the banks’ own creations. Constant vigilance, disparate contingency plans and swift reaction time driven by technology shall become a more pronounced preoccupation of bank risk managers and regulators.

The sudden perilousness brought about by rapidly changing risk landscapes will be a fixture going forward representing a formidable planning challenge for banks and the unknown until a black swan event occurs with far-reaching consequences. This is vividly demonstrated by recent history with the sudden and swift global onsurge of the Covid pandemic triggering business failures and degraded loan portfolios, government mandated health protocols necessitating the rapid adoption of Gen AI-driven norms of doing business.

Or who would have thought that the failure of a California based regional bank, ironically not because of poor credit but instead due to an ill-conceived maturity mix of an iron-clad creditworthiness of US government securities hit by the vagaries of mark to market accounting and regulatory conventions, could escalate far beyond the great expanse of the Western United States and eventually lead to the collapse and forcible merger of Switzerland’s two banking giants that heretofore were icons representing trust and stability.

Constant, regular and rigorous multiple risk simulations covering the appropriate earning assets, liabilities tenors, currency, sovereign exposure mixes and off-balance sheet items are lessons learned and will surely be the order of the day for wizened and chastised boards. Again, Gen AI will be the enabling key to manage and execute these risk mitigation necessities.

According to Accenture, these new ways of coping with these diverse risks while improving bottom lines by devising new modes of how to provide customer-centric services that differentiate will require massive investments in recruiting and training Gen AI talent focused not just on changes in roles, tasks and skills but also on how Gen AI is likely to change the soul of the organization.

Accenture has labeled this as the “war on talent” that will require the full immersion and commitment of banks in order to win the war. Recognizing that demand will likely greatly exceed such availability, Accenture claims that “banks are starting to think about how AI should be integrated into every role and function and how their workforces and culture will change as the technology automates much of the necessary work and elevates human skills such as strategic and creative thinking, judgement and relationship building … it is only when the human + machine workforce is expanded and enhanced in such a holistic and human-centric way, and when HR and change professionals are involved in shaping the transformation, that the full potential of generative AI will be within banks’ reach.”

To prove their point, Accenture cites Singapore’s OCBC Bank, a Gen AI trailblazer which has rolled out to its 30,000-strong employee workforce a six-month trial of an intelligent chatbot to help them write, translate, research and innovate. The participants are now able to do their work 50 percent faster inclusive of the fact checking and accuracy of their output. The productivity result is consistent with an earlier trial to develop code, summarize documents, transcribe calls and create an internal knowledge base.

Currently, the bank uses AI to make more than four million decisions daily in risk management, customer services and sales. OCBC is set to increase this to 10 million by 2025.Until next week … OBF!              

  (To be continued)

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