Gen AI

How can financial institutions adopt generative AI responsibly?

Firms need to weigh risks and benefits of new technology as they deploy it within their organizations.

In brief

  • Trust and accuracy of the output created by generative AI remain key areas of concern.
  • As governments deliberate potential action, financial institutions need to adopt frameworks that assess and manage risks.
  • A phased approach, with experimentation and scaling of use case implementation, to support a responsible AI activation framework is essential.

While generative AI holds tremendous potential, it is also constrained by the risks and limitations associated with this technology. Concerns have been raised related to what might occur from improper use of these technologies, absent adequate guardrails. There is also a growing apprehension about how these models will disrupt the workforce. Furthermore, the financial and sustainability implications of using powerful large language models have yet to be addressed.

To address this, some industry observers are urging national and local governments to accelerate AI regulation in concurrence with its adoption. The European Parliament has already taken preliminary action, passing a law that would attempt to regulate artificial intelligence. In the US, the White House published an AI bill of rights last fall, while the US Senate unveiled its plan to discuss potential AI regulations.

While these regulations have yet to take effect, they could foreshadow actions governments and other regulatory bodies might take to establish guardrails for this rapidly developing technology.

Until a consensus is reached on what those guardrails should be, financial institutions must carefully review the risks in context of the intended use and set up appropriate evaluation and risk mitigants to limit the exposure from activating these technologies in their nascent stage.

Certain key risks and considerations are highlighted below:

How EY can help

Setting out for responsible activation

Before organizations attempt to integrate generative AI into their organizations, executive decision-makers also need to ask another set of key questions, including how can generative AI support their corporate goals and objectives, and what kind of training and resources will be required to embed and maintain generative AI capabilities into their core platforms and/or key business processes?

Financial institutions can embark on their journey to adopt and deploy this groundbreaking technology in a phased approach:

Without question, generative AI presents a transformative opportunity pushing the boundaries of what machines can do. In order to truly embed this new technology into their organizations, financial services institutions need to lay the necessary groundwork for responsible activation by investing time and resources in extending existing AI governance and oversight frameworks to manage risks. This foundation will serve as a key differentiator between organizations that remain in experimentation mode and organizations that truly realize the gains from generative AI through robust operationalization.

Kiranjot Dhillon also contributed to the article.

Summary 

To achieve the full potential of generative AI, financial services organizations also need to address the risks and limitations posed by this breakthrough technology. To that end, financial services firms need to establish appropriate guardrails that limit the potential risk of activating AI within their organization.

Related articles

How can financial services firms derive value from generative AI?

Can banks and financial institutions drive and sustain the responsible activation of generative AI (artificial intelligence) in financial services?

09 Aug 2023 Sameer Gupta + 1

Unleashing the potential of generative AI: a game-changer for P&C insurance claims

Leveraging generative AI in property and casualty claims. Download the full report.

07 Aug 2023 EY Americas

How AI will affect compliance organizations

Recent developments in AI present the financial services industry with many opportunities for disruption. Learn more about the potential impacts.

18 Jul 2023 Don Johnson + 1

Using AI to improve a bank’s agent effectiveness

Leveraging the power of AI and machine learning, one bank mined sales agents’ calls for performance-boosting insights. Learn more in this case study.

17 Jan 2023

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.