Artificial intelligence (AI) is taking the financial industry by storm. From running financial analyses to conversing with banking customers, it seems there’s little AI can’t do. But will this revolutionary technology take over the financial industry? Should businesses and bankers be concerned about AI replacing tasks traditionally completed by capable, creative and insightful humans?
While AI has the potential to be a game-changer in the financial services industry, there are a few reasons why it may take some time for these new tech tools to really take off.
ChatGPT experienced exponential growth in 2023.
By now you’ve no doubt heard of ChatGPT, a powerful language model developed by OpenAI. With its ability to understand and generate human-like text, ChatGPT has gained significant traction around the world — and is already being leveraged in a number of industries and sectors.
Check out these ChatGPT stats:
- The majority (58%) of US adults are familiar with ChatGPT.
- In May 2023 alone, over 200 million unique visitors used ChatGPT.
- According to one survey, 73% of respondents believe ChatGPT will increase workplace efficiency and 62% believe it will improve task accuracy.
While these statistics cover a variety of ChatGPT uses, not just the tool’s financial industry implications, they highlight one fact — AI is a significant advancement that’s quickly moved from experimental innovation to mainstream usage.
What are the benefits of using ChatGPT for financial tasks?
If you’re new to the AI and ChatGPT conversation, you may wonder, what’s the benefit of leveraging AI over a highly trained workforce?
Aside from the obvious benefits of lower overhead and less office space, ChatGPT offers three significant advantages over human labor:
1. Increased efficiency.
ChatGPT can streamline financial processes by automating routine tasks, allowing for faster and more efficient completion of customer requests, data analysis and report generation. This efficiency can translate into hundreds of weekly hours saved and thousands of dollars in labor saved for the financial institutions that use it.
2. Increased accuracy.
ChatGPT’s advanced language processing capabilities can help minimize the common errors that sometimes occur in manual data entry and information retrieval. With more accurate financial records and reports, customers are happier, banks are stronger, and everyone is empowered to make more informed decisions.
3. Increased customer satisfaction.
With ChatGPT’s ability to provide personalized and prompt responses, customers can experience a higher level of personalized service. And those quicker and more accurate responses can strengthen customer loyalty, trust and overall satisfaction.
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How is AI being leveraged in the financial services industry?
AI in the financial industry has a few interesting uses. Two major uses are in automated customer service and fraud detection.
When it comes to customer service, ChatGPT can be used to handle common customer queries, offer support services, give quick and accurate responses to account inquiries, and share information about transaction details. Natural language models like ChatGPT can also be used to give general financial guidance or answer basic financial literacy questions.
In terms of fraud detection, AI-powered algorithms can be used to analyze huge amounts of financial data — identifying potentially fraudulent activities quickly. AI systems are expert pattern detectors, and can recognize the kinds of anomalies and suspicious transactions that suggest fraud is present. This exciting AI application has the potential to make financial services significantly more secure, while catching fraudulent behavior earlier than ever.
How might ChatGPT change the finance industry?
The emergence of AI-based financial tools has both positive benefits and potentially negative short-term consequences.
On the positive side, ChatGPT’s ability to understand natural language and provide tailored, on-brand responses has the potential to enhance companies’ customer experience. With increasingly personalized interactions, customers can receive relevant and timely information, gain new financial insights, and make smarter money decisions based on tailored advice. That has the potential to increase customer loyalty and boost these businesses’ popularity.
On the other hand, with ChatGPT and other AI technologies increasingly covering the daily tasks previously assigned to humans, there is a necessary concern about job displacement. AI has the ability to automate a myriad of necessary tasks, which saves financial institutions considerable time — but also puts employees at risk. If tasks like data entry, basic customer support, and transaction processing were suddenly handled through AI tools, this could result in major workforce adjustments.
The future of ChatGPT in finance and accounting
A handful of major financial companies are already using ChatGPT, or their own in-house AI tools, to streamline their services. Goldman Sachs, for example, recently announced its developers are using AI-based tools to write code for its financial products. JPMorgan Chase is actively hiring AI experts. And Morgan Stanley is experimenting with multiple AI applications.
While these companies are notoriously quiet about their unique uses for ChatGPT and AI tools, one thing is clear — they are willing to embrace the technology, on their own terms. However, it appears each major player may be months or years away from releasing their AI-based financial services to the general public.
The evolution and adoption of AI, including ChatGPT, is expected to continue reshaping the financial industry as we know it. AI-driven systems will likely play a key role in supporting customers, analyzing data, and preparing reports for more accurate, real-time decision making. And while there may be some concerns about job displacement, JPMorgan Chase serves as a great example of the new job opportunities AI can create in the financial industry.
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This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.
