The adoption of generative AI (GenAI) is transforming industries, with financial services at the forefront of this evolution. However, as banks and other financial institutions embrace AI’s promise, they face a pivotal challenge: how to balance innovation with strategic risk management while maximizing ROI.
In this blog, we explore key considerations for integrating AI effectively in the financial sector and outline practical steps for achieving measurable success.
AI ROI: Hype or Reality?
AI is no longer an optional innovation for financial institutions; it’s a strategic necessity. Yet, the journey from adoption to ROI is fraught with complexities. For many banks, limited budgets, scarce technical expertise, and the rapid pace of AI development make in-house model deployment impractical. Despite these challenges, ready-made, proven solutions are providing a clear path to success.
Purpose-Built AI: Unlocking Opportunities
- AI-as-a-Service (AIaaS):
Providers like OpenAI, Microsoft, and AWS offer advanced AI models as managed services. These platforms eliminate the need for enterprises to build AI from scratch. Instead, financial institutions can leverage basic AI functionality by focusing on:- Aligning AI tools with business objectives.
- Ensuring regulatory compliance.
- Training employees to maximize adoption.
- Industry-Specific Solutions:
Vertical-focused AI tools, such as Salesforce Einstein and ServiceNow AI, address financial sector challenges with minimal customization. Industry specific AI platforms that are also purpose built for an enterprise function, such as Persado, are proven to help retail banks and card issuers generate personalized, persuasive marketing content, driving customer engagement, and boosting conversions that grow the bottom line..
The Risks of Humanless AI
Despite the allure of fully autonomous AI, the technology is not yet reliable enough to replace human oversight entirely. Current models excel as collaborative tools, generating insights and automating tasks, but high-stakes decisions in areas like compliance and strategic planning still require human judgment.
As the technology matures, enterprises will likely strike a balance between AI-driven innovation and human governance, mitigating risks while leveraging AI’s potential.
Challenges in Building In-House AI
Developing AI models internally presents significant hurdles:
- Financial and Talent Costs: The investment in infrastructure, talent, and development is immense.
- Technological Obsolescence: Rapid advancements in AI often outpace deployment cycles, making it difficult for in-house efforts to stay competitive.
Gartner predicts that by 2028, more than 50% of enterprises that have built large AI models from scratch will abandon their efforts due to costs, complexity, and technical debt in their deployments.
Additionally, in the firm’s analysis of costs incurred in different GenAI deployment approaches (see chart), the firm estimated the costs incurred for financial services organizations to build custom large language models (LLMs) to be:
- ~ $8M to $20M in up-front costs
- ~ $11M to $21M in recurring costs per user, per year
The firm also estimates that, for most institutions, focusing on external AI solutions offers a faster and more cost-effective route to measurable ROI.
Achieving Quick AI Wins
Financial services can achieve immediate benefits by prioritizing:
- Managed AI Platforms: These come with built-in governance, security, and compliance, streamlining deployment while minimizing risk.
- Targeted Use Cases: Automating marketing content, enhancing customer support, and streamlining document summarization are proven, high-impact applications that deliver measurable ROI within months.
- Iterative Implementation: Starting with small, manageable projects allows financial institutions to build momentum, reinvesting savings into more ambitious AI initiatives.
The Path Forward
The finserv industry stands at a crossroads where AI can drive innovation and efficiency. By adopting purpose-built solutions, embracing iterative implementation, and maintaining a strategic focus on high-ROI use cases, institutions can navigate the complexities of AI adoption and secure a competitive edge.
AI is not a distant promise but a present opportunity. For financial services leaders, the time to act is now—prioritize innovation while ensuring robust oversight to achieve sustainable growth.
By leveraging GenAI strategically, retail banks and card issuers can unlock unprecedented opportunities, transforming challenges into measurable successes. With the right approach, AI is not just hype—it’s the future of financial services marketing.