Generative AI – The New Pivot For The BFSI Industry

The banking, financial services, and insurance (BFSI) sector has transformed significantly in the past few decades, transitioning from an era of time-intensive, manual processes to a completely digital environment, where users can access services from anywhere and anytime. However, the BFSI industry demands a more powerful and efficient technology due to the changing market dynamics and customer requirements. 

Generative AI (Gen AI) emerges as the leading solution for the BFSI industry to meet varying consumer expectations and help businesses stay competitive. According to Precedence Research, the Gen AI in financial services market size is projected to reach US$13.33 billion by 2033 from US$1.19 billion in 2023, growing at an impressive CAGR of nearly 27% during 2024-2033. The expected growth is a result of its capability to enhance operational efficiency, improve risk management, and provide customized solutions to customers. 

This article explores the impact of Gen AI on BFSI businesses and how it is emerging as the new pivot for the industry. Moreover, it also provides an action plan for the industry stakeholders and emerging BFSI business leaders to develop a robust Gen AI infrastructure within the organization.

How Generative AI Is Rewriting The Future Of BFSI – 3 Pivotal Roles Of Gen AI In Businesses

Gen AI's futuristic capabilities include AI prediction models, chatbots and virtual assistants, speech generation systems, and more that can generate real-time images, text, audio, videos, codes, and more. This is beneficial, especially for BFSI businesses, as it allows them to quickly analyze huge data sets and deliver personalized customer experiences and user responses. 

Let us now understand the three crucial roles Gen AI can play in the BFSI sector and why it can be labelled as the next pivot for the industry. 

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Transforming Customer Experiences (CX) Across All Touchpoints

The BFSI industry has always struggled to deliver a memorable customer experience due to slow and fragmented business processes. Some of the prevalent problems include manual operations, long waiting times, and lack of transparency in communications, leading to reduced customer satisfaction and increased drop-off rates. 

However, Generative AI can assist BFSI organizations to tackle the problem of poor customer experience by addressing and streamlining all the touchpoints. AI assistants and chatbots can automate manual processes and make them fast and intuitive – significantly reducing the wait time from hours to just a few seconds. This way, Gen AI models can transform customer experiences (CX) and enhance customer loyalty and brand image.

Example: Customer onboarding in financial institutions is among the many processes that lagged before Gen AI adoption. The traditional onboarding process involved boring, static form-filling and physical identity verification, leading to weeks of delay in onboarding. However, with the integration of Gen AI in customer onboarding, the journey can be shortened to minutes. With the help of conversational forms and Gen AI assistants, customers can resolve queries that arise during onboarding in real time. 

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Boosting Productivity With Gen AI Assistants & Chatbots

Employees in BFSI businesses have been dealing with productivity issues for a long time. Manual data searching, competitor analysis, and customer support lead to slower response times, reduced efficiency, and gradually delayed conversion time. This also inhibits them to focus on value creation and customer relationship building.

However, with strategic Gen AI adoption, change is possible. Gen AI can help employees boost productivity by automating redundant and time-consuming tasks and providing them with the necessary information within seconds. Along with productivity benefits, Gen AI can also enhance the overall efficiency of services and enable employees to focus on customer engagement and trust building, leading to higher conversions and increased revenue. 

Example: A shopping and travel enthusiast is looking for credit cards with lucrative deals and offers. The customer support agent manually searches different cards and assesses their features, leading to hours of delay. While with Gen AI systems, the agent can simply type the prompt containing user requirements, and get the best-suited credit card in less than a minute. This frees up the rest of the time to build relationships with customers and offer other services and products of the business.

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Integrating Customer Insights & Product Voice At All Organizational Levels

Many BFSI organizations face the problem of siloed data and fragmented customer insights, leading to indecisiveness and miscommunication at different organizational levels. In addition, poor integration of product insights also leads to inconsistent customer interactions and misaligned message delivery.  

Gen AI can help businesses overcome the problem of data siloes by integrating customer insights and product voices throughout the organization. This ensures that all the departments are on the same page and have access to real-time information for consistent and uniform messaging. 

Example: In an insurance company, there might be a case when a person looking for a house loan also requires term insurance. In that scenario, the house loan department will coordinate with the insurance team to provide a combined offer. Without Gen AI, the process can become complex with a high chance of error. However, with Gen AI tools, both departments can collaborate seamlessly and provide customizable plans, enhancing the brand reputation. 

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Value Proposition - What Does Gen AI Exactly Put On The Table?

Generative AI offers enormous value to BFSI businesses by enabling them to gather customer insights, conduct market research and provide tailored services to end-users. Some key value propositions of Gen AI include: 

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1. Productivity: 

Gen AI eliminates the scope of errors and delays associated with manual operations and boosts overall employee productivity. By automating repetitive tasks like form filling, document reviews, and code generation, Gen AI enhances the operational efficiency of BFSI businesses. Moreover, McKinsey research reported that businesses adopting Gen AI technologies experience a 25-40% increase in operational efficiency. 

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2. Customer Relationships: 

According to Salesforce, around 65% of customers expect immediate responses through digital channels. Gen AI can be beneficial in this regard, as AI chatbots and virtual assistants can instantly address user queries and provide personalized responses – leading to higher satisfaction and deep customer relationships. 

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3. Revenue Growth: 

Gen AI technologies have the potential to add between $200-340 billion in annual revenue for the global banking industry, says the McKinsey Global Institute (MGI). Further, Gen AI reduces operational costs and eliminates the need for human intervention by automating routine tasks, like data entry, customer support, and transaction reporting and processing. 

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4. Data-backed Results: 

The global BFSI sector generates over 2.5 billion gigabytes of data daily. This comprises numerous data-intensive processes, like insurance underwriting, credit analysis, product and service marketing, and customer experiences. Gen AI tools can analyze these massive datasets in seconds and generate predictions, helpful in formulating robust policies and offering tailored services.

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Roadmap For BFSI Leaders For A Successful Gen AI Future

Incorporating Gen AI strategically into the core operations can be a game-changer. Thus, an action plan is given below that will help BFSI leaders successfully adopt Gen AI in their businesses: 

1. Develop A Gen AI Strategy: 

Having a clear understanding of the areas that require Gen AI assistance is important. For example, in domains like predictive analysis, customer support, fraud detection, risk optimization, and workflow automation, Gen AI can be faster and more accurate than humans. But, making business decisions and dealing with customers is something humans do better. 

2. Invest In AI-handy Data Infrastructure: 

Gen AI models are based on neural networks that require substantial training data. BFSI leaders should ensure the sufficient availability of high-quality data by investing in authentic and reliable data sources. 

3. Provide Training To Employees: 

As Gen AI is a relatively new concept, employees may struggle to leverage it to bring the most value. Therefore, BFSI leaders should take responsibility and provide necessary training to their employees to leverage the technology to its fullest and enhance their productivity. 

4. Focus On Integration Of Gen AI With Existing Infrastructure: 

Integrating Gen AI with existing computer systems can be challenging, especially when the systems are outdated. Thus, BFSI leaders should focus on hiring new talents and rebuilding computer infrastructure to support the integration of Gen AI. 

5. Stay Updated In The World Of AI: 

AI is evolving rapidly with various daily advancements. From chatbots and virtual assistants, Gen AI is witnessing the emergence of multimodal systems that can process multiple inputs simultaneously and generate real-time content. Thus, it becomes imperative for BFSI executives to stay aware of ongoing developments. 

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Final Word

The BFSI sector is advancing fast and businesses are investing heavily in the latest technologies, like generative AI (Gen AI) and machine learning (ML) to stay ahead of the competition. Therefore, it's high time for BFSI leaders to adopt Gen AI completely and enjoy benefits like enhanced efficiency, improved decision-making, workflow automation, better risk management, and personalized customer experiences – all leading to a boost in productivity and revenue. 

Gen AI is here to stay and business leaders who embrace this shift will be at the forefront of the BFSI industry's next phase of growth.

So, if you're looking for the best Gen AI solutions, try Alltius. Developed as a result of decades of research at Wharton and Carnegie Mellon, Alltius is a leading Gen AI platform that has helped top BFSI businesses boost their sales by 3X and slash customer support costs by 50% within just weeks of its implementation. 

In addition, Alltius's powerful AI tools have helped leading BFSI businesses, like AngelOne, GMR, Matchbook, and Prudential reduce their support costs by $50K monthly.

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