Generative AI in Financial Institutions: Balancing Innovation

Generative AI is developing at an exciting pace, transforming compliance, risk management, and the customer experience. It’s potential also requires financial institutions to navigate ethical dilemmas, security risks, and implementation challenges. This episode of the Forward Thinking Podcast features FCCS VP of Marketing and Communications Stephanie Barton and Kris Stewart, a certified regulatory compliance manager, product manager, attorney and business leader for Wolters Kluwer Compliance Solutions for a conversation about the power and possibilities of generative AI in financial institutions and how farm credit institutions can harness this technology while ensuring compliance and trust with their customers. 

 

Episode Insights Include:

 

Generative AI in the Financial Industry 

• Generative AI is already a game changer and will continue to shape the future. 

• Real-world applications include credit risk assessments, servicing loans, and reviewing credit documents. 

• Compliance officers can utilize generative AI to tackle regulatory updates. 

• Generative AI can read data, find relationships, and report on actionable patterns. 

• As an assistant, generative AI filters the work and never gets tired. 

 

Enhancing the customer experience

• A personalized banking experience is possible with generative AI. 

• Considerations for lending, fraud detection and financial planning. 

• A seamless process is possible with increased AI input. 

• AI has the ability to catch and prevent fraud faster. 

• 24/7 availability and endless time to answer questions are perks for AI users. 

• AI utilities data that is already available and decreases time required for filling out forms. 

 

Risks associated with generative AI adoption

• Data security and privacy are at the top of the list of potential concerns. 

• Loan decisioning data has the potential to have bias built into it. 

• Generative AI hallucinations are a result of the language predictive model. 

• Each of these considerations is improving, and still require human input where logical. 

• Guardrails will always need to be in place to monitor accuracy. 

 

Addressing key ethical dilemmas

• AI needs to continually be working for customers, not against them. 

• Transparency is key in utilizing generative AI. 

• Strong governance and control framework are critical to successful AI application. 

• AI has the potential to enhance or destroy customer relationships. 

 

The role of compliance officers in generative AI adaptation

• The standard approach to compliance governance must be employed to AI. 

• Fair lending issues, whether created by humans or AI, must be addressed in the same way. 

• AI must be considered as an additional way to deliver goods and services, and not permitted to violate laws that already exist. 

 

Overcoming implementation roadblocks

• The state of your data structure is critical to effective implementation. 

• Inaccuracies and biases that are built into data need to be cleaned up prior to significant use within AI. 

• A good governance structure needs to be in place from the beginning. 

• Vendor solutions can help with implementing AI. 

• Strategically identify where specifically your company will utilize AI. 

• Consider use cases to maximize effort and investment. 

 

Measuring the success of AI implementation

• Consider your current customer processes and satisfaction, and apply the same metrics on AI. 

• Operational efficiencies can be measured by key performance indicators. 

• Apply the measurements that are already providing useful information to AI. 

• Consider employee engagement – how is AI utilization affecting your team? 

 

The future of generative AI

• Deep research in generative AI is leveraging reasoning to find and analyze data. 

• AI is coming, and we as humans need to be educated about and prepared for what it is capable of. 

• Consider competencies required of future generations to optimize efficiencies. 

 

This podcast is powered by FCCS.

 

Resources

 

Connect with Kris Stewart — Kris Stewart

 

Get in touch

 

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“I like to think of generative AI as the most knowledgeable, fast, compliance assistant that I could ever hope to hire.” — Kris Stewart

 

“Generative AI is not meant to replace the human, it’s meant to help filter the work.” — Kris Stewart

 

“You need AI to do your work efficiently these days, but you need guardrails too.” — Kris Stewart

 

“Be fearless about investing and learning. The technology wave is coming whether you engage or not.” — Kris Stewart