Retail banking in Asia Pacific is on the brink of a revolutionary transformation driven by Generative AI (GenAI). According to a recent IDC report titled Generative AI in Retail Banking: Opportunities and Use Cases, a remarkable 41% of retail bankers in the region are poised to invest in GenAI technologies, predicting a radical shift through the seamless integration of GenAI with data management and core banking systems (IDC, 2023).
“GenAI is the next game changer for retail banks. It enables unstructured data to be included in the decision-making process and brings in multiple new algorithms with the help of synthetic data. It has a game-changing ability to generate artifacts, such as images, text, and voice, which enable an instant gratification experience,” says Ashish Kakar, Research Director, IDC Asia Pacific Financial Insights.
The report highlights several GenAI use cases that are being explored by financial institutions and discusses their potential impact on the bank of the future:
The GenAI-Driven Bank of the Future
GenAI plays a central role in transforming every aspect of retail banking, from tools and products to customer experience (CX) and profitability. They are using Gen AI tools to enhance risk control frameworks, client onboarding, and service journeys, seeing gains in operational cost reductions and improved client experiences. Technology teams in large institutions apply Gen AI to modernize legacy systems, reducing technical debt and freeing up costs for innovation.
LLM-powered tools facilitate code generation and debugging, delivering scalable microservices designs, while low-code platforms generate documentation and API code. COOs are converting procurement functions into revenue generators with Gen AI insights, offering “procurement-as-a-service.” Innovative banks and FinTechs also use Gen AI to reconfigure and create new products dynamically, meeting evolving client needs (Dutta, 2024).
GenAI-Powered Customer Journeys
GenAI’s ability to generate complex content customizes retail experiences across the end-to-end customer journey, impacting acquisition, onboarding, transaction processing, servicing, portfolio management, risk management, and collections.
The areas with the most significant potential impact should be prioritized, including knowledge management, fraud detection, loan acquisition, and rewards. With the exciting opportunities GenAI presents for retail banking, vendors must communicate the benefits and costs associated with AI investments. Even for the largest banks, building Large Language Models (LLMs) requires considerable effort (Knowles, 2024).
“We have observed that most retail banks prefer working with GenAI vendors that offer flexibility and can accelerate their GenAI journey. Retail banks need to begin by leveraging the easiest way to access GenAI applications and pre-trained models, enabling them to understand the benefits and impacts of GenAI. Subsequently, they can customize or fine-tune their models based on their specific requirements,” says Xiao Liu, Research Manager, IDC Asia/Pacific Financial Insights.
References
International Data Corporation. “41% to Redefine Retail Banking in Asia/Pacific, Inclined to Invest on Generative AI, according to IDC.” IDC: The Premier Global Market Intelligence Company, 19 Nov. 2023, http://www.idc.com/getdoc.jsp?containerId=prAP51403123.
Knowles, Catherine. “Asia Pacific Retail Banks Show Growing Interest in Generative AI.” IT Brief India, IT Brief India, 24 Nov. 2023, http://www.itbrief.In/story/asia-pacific-retail-banks-show-growing-interest-in-generative-ai.
Dutta, Suruj. “Unlocking the Future of Banking: The Transformative Power of Generative AI.” http://Www.ey.com, 15 Apr. 2024, http://www.ey.com/en_lb/financial-services/unlocking-the-future-of-banking-the-transformative-power-of-generative-ai.
