White paper: How can generative AI shape the banking industry?

A generative AI (GenAI) is a category of artificial intelligence designed to generate new content from existing data, such as text, images, music, or even videos. These AI models are trained on vast amounts of written, visual, and auditory data to learn patterns and structures within the data it can access. The most common interface with an LLM GenAI is a natural language text interface where a person describes what they want to be generated through a statement or question.

In the few months since its release, PAC has witnessed a technological “arms race” by software companies to address how they incorporate GenAI into their suite of products due to the mass public awareness of the technology. Software companies are approaching this from different perspectives based on the focus of their business. Still, PAC has seen many technology companies approach this innovation as “The answer is GenAI; now what is the question?”. Whilst this exuberance within the technology industry is nothing new, the sheer velocity of software companies incorporating GenAI into their existing software and services has been unprecedented, and it can be overwhelming for banks in the immediate term.

However, for this report, it is important to frame the technological journey the banking industry has been experiencing for the past decade to best understand the role and value of GenAI in its current form. PAC considers that the onset of digital transformation a decade ago forced banks to adjust how they provided business-to-consumer (B2C) services due to an expectation by customers to have access to their banking services through online and mobile application services anywhere at any time. This forced evolution impacted all forms of banking, from retail, corporate, and investment, to private and was further impacted with the onset of Open Banking being adopted across many countries. Though the now ubiquitous use of digital banking services, which still vary in maturity across regions and countries, led, in PAC’s opinion, to the rise of technology start-ups focused on disrupting and innovating the financial service sector commonly referred to as Fintech companies.

The white paper is available for download.