This review delves into the revolutionary effects of Generative AI on the banking industry, tracking its potential to disrupt several banking processes and relationships with customers. Personalized financial advice, risk management, client service, fraud detection, and generative AI\'s capacity to produce fresh data and answers that resemble human behavior are just a few of the many uses for generative AI in the banking industry. Generative AI can boost productivity, precision, and happiness among consumers by automating tedious tasks and improving judgment. But there are obstacles to integrating new technology as well, including worries about data privacy, ethical implications, and the need to invest much in infrastructure and training. To give a thorough picture of how Generative AI is changing the banking industry, this study compiles recent studies and case studies, summing up the pros and cons that banks are encountering as a result of embracing this cutting-edge technology
Introduction
The banking sector, a historic leader in technological innovation, is now poised for transformation through Generative AI, which can create human-like text, images, and code. Generative AI offers significant potential to enhance banking operations by improving efficiency, accuracy, personalization, fraud detection, risk management, and customer service through AI-powered chatbots and tailored financial advice.
However, challenges such as ethical concerns, data privacy, regulatory compliance, and the high costs of implementation remain. Policymakers must balance innovation with regulation to avoid stifling progress or creating risks. Studies highlight the growing impact of AI on banking performance, customer experience, and operational processes globally, with Indian banks being notable examples of AI adoption.
Generative AI is also influencing education and ethical discussions around AI use, emphasizing the need for transparency, accountability, and human-centered design. Overall, adopting Generative AI responsibly is critical for banking’s future, offering opportunities to optimize services, enhance security, and deepen customer relationships while navigating significant moral and practical challenges.
Conclusion
By streamlining operations, improving decision-making skills, and creating tailored experiences for customers, generative AI has the potential to radically alter the banking industry. Generative AI has the ability to revolutionize the banking industry by enhancing efficiency, accuracy, and customer happiness through its application in areas like fraud detection, customer care, personalized financial advising, and risk management. The incorporation of this technology, however, is not a picnic. Responsible and effective implementation requires thorough attention to ethical considerations, data protection problems, and the necessity of major investment in infrastructure and training.
In this analysis, we look at the pros and cons of using Generative AI in financial institutions. Better risk management, more efficient operations, and more satisfying encounters with customers are just a few of the many advantages. However, we must not ignore the difficulties associated with ethical use, data security, and compliance with regulations. To responsibly deploy Generative AI, financial institutions need to develop transparent guidelines, conduct regular assessments, and set explicit policies and principles.
To be competitive and fulfill the needs of a digital-first society, the banking sector must strategically incorporate Generative AI as it continues to evolve. A future that is more efficient, safe, and customer-centric can be achieved if banks take advantage of Generative AI\'s advantages while also tackling its inherent problems. This shift, propelled by unwavering dedication to ethical principles and ever-improving AI technology, will redefine the banking environment in the end, encouraging innovation and growth in the business.
References
[1] Jon Truby , Rafael Brown & Andrew Dahdal “Banking on AI: mandating a proactive approach to AI regulation in the financial sector” Law and Financial Markets Review 2020.
[2] Poonam Jham, Dr Raj Kumar “BANKING SECTOR REFORMS AND ITS IMPACT ON BANKING INDUSTRY” International Journal in Management and Social Science 2013.
[3] Stephanie Ness, Mykola Volkivskyi “Banking 4.0: The Impact of Artificial Intelligence on the Banking Sector and its Transformation of Modern Banks” International Journal of Innovative Science and Research Technology 2024.
[4] Stephanie Houde, Vera Liao, Jacquelyn Martino “Business (mis)Use Cases of Generative AI” arXiv:2003.07679v1 [cs.CY] 2 Mar 2020.
[5] Safinah Ali, Daniella DiPaola, Randi Williams, Prerna Ravi “Constructing Dreams using Generative AI” arXiv:2305.12013v1 [cs.HC] 19 May 2023.
[6] Rajath Karangara “FINTECH\'S GENERATIVE AI REVOLUTION: HOW AI IS SHAPING THE FUTURE OF BANKING AND FINANCIAL SERVICES” International Research Journal of Modernization in Engineering Technology and Science 2023.
[7] Kathryn Coleman and ChatGPT “Generative AI and education ecologies” SoTEL Symposium 2023.
[8] Rudrendu Kumar Paul, Bidyut Sarkar “GENERATIVE AI AND ETHICAL CONSIDERATIONS FOR TRUSTWORTHY AI IMPLEMENTATION” International Journal of Artificial Intelligence & Machine Learning 2023.
[9] REGINA KAPLAN-RAKOWSKI, KIMBERLY GROTEWOLD “Generative AI and Teachers’ Perspectives on Its Implementation in Education” Jl. of Interactive Learning Research 2023.
[10] Richard Watermeyer, Lawrie Phipps, Donna Lanclos “Generative AI and the Automating of Academia” Postdigital Science and Education 2023.
[11] Bahadur Singh “Generative Artificial Intelligence: Prospects for Banking Industry” International Journal of Research in Engineering, Science and Management 2024.
[12] Anshumali Ambasht “Impact of Generative AI on Data Integration” International Journal of Computer Trends and Technology 2023.
[13] Ameya Shastri Pothukuchi, Lakshmi Vasuda Kota, Vinay Mallikarjunaradhya “IMPACT OF GENERATIVE AI ON THE SOFTWARE DEVELOPMENT LIFE CYCLE (SDLC)” IJCRT 2023.
[14] Megha D. Shetty & Nikhitha M. K. “Impact of Information Technology on the Banking Sector” International Journal of Management, Technology, and Social 2022.
[15] Nydia Remolina “Generative AI in finance: risks and potential solutions” Remolina N. Law Ethics Technol. 2024.
[16] Mehmood, R., Bashir, R., & Giri, K J. (2023, February 21). Deep Generative Models: A Review. https://doi.org/10.17485/ijst/v16i7.2296.
[17] Kini, A N., & Basri, S. (2022, May 23). An empirical examination of customer advocacy influenced by engagement behaviour and predispositions of FinTech customers in India. https://doi.org/10.12688/f1000research.74928.2
[18] Karangara, R. (2023, August 23). Impact of Fintech on The Banking Industry in UK and Europe. https://zenodo.org/record/8392844.
[19] Yassin, E., Gharieb, A., Saad, H., & Qura, O. (2022, June 1). Robots, artificial intelligence, and service automation (RAISA) technologies in the Egyptian hotel sector: A current situation assessment. https://doi.org/10.21608/ijhth.2022.287420.
[20] Hergan, K. (2022, August 8). \"Challenges implementing and running an AI-Lab: Experience and Literature Review\". https://doi.org/10.26717/bjstr.2022.45.007222.
[21] Khan, H U., Malik, M Z., Alomari, M K., Khan, S., Al-Maadid, A., Hassan, M K., & Khan, K. (2022, April 5). Transforming the Capabilities of Artificial Intelligence in GCC Financial Sector: A Systematic Literature Review. https://doi.org/10.1155/2022/8725767.
[22] Dibouliya, Ashish. \"Review on: Modern Data Warehouse & how is it accelerating digital transformation.\" International Journal of Advance Research, Ideas and Innovations in Technology 9.2 (2023): V9I2-1224.
[23] Dibouliya, Ashish, and Varsha Jotwani. \"The transformational impact of modern data warehousing on the banking system.\" International Journal for Research in Applied Science and Engineering Technology 11 (2023): 6.APA
[24] Dibouliya, Ashish, and Dr Varsha Jotwani. \"Review on data mesh architecture and its impact.\" Journal of Harbin Engineering University 44.7 (2023): 2353-2363.