Banks Employing Artificial Intelligence in 2024: An Overview
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In the ever-evolving world of finance, artificial intelligence (AI) is making waves, revolutionizing the way banks operate.
Leading the charge, Morgan Stanley has unveiled an AI-powered assistant, enabling financial advisors to swiftly access information across 100,000 reports and documents. This technological leap is expected to streamline operations and enhance service quality.
J.P. Morgan, too, has embraced AI, reporting a 15-20% reduction in account validation rejection rates after implementing AI-powered large language models for payment screening. The bank is also developing an AI assistant to select potential investments for customers.
As we move into 2024, generative AI is set to remain a hot topic in banking, with the ongoing prominence of ChatGPT driving this trend.
However, when it comes to foreign exchange (FX) transactions, major banks worldwide generally offer pricing that includes wider spreads and additional fees compared to specialized currency brokers or fintech FX providers. These banks often charge significant hidden spreads, transaction fees, and may provide poorer service, leading to higher overall costs, particularly for businesses and large transfers.
In contrast, currency brokers and specialized FX services typically provide more competitive exchange rates, lower fees, and greater transparency, along with personalized FX strategies and advanced technology platforms. Some banks, such as FNB in South Africa, do offer indicative rates updated frequently and potential personalized discounted rates for larger transactions or customers.
The FX market environment in 2024 remains volatile due to geopolitical issues and central bank actions, making strategic FX management crucial for businesses.
While AI is transforming banking, concerns about misinformation, misuse of customer data, and potential bias have led to calls for greater regulation. Collaboration with regulators is likely to be vital for banks to innovate while ensuring customer protection and correct data usage.
Banks are also focusing on AI-powered solutions to prevent fraudulent transactions, improve customer experiences, and increase productivity. Some banks have partnered with AI companies, while others have invested in their own R&D. The impact and effectiveness of generative AI projects in banking are still in their early stages, but experiments like those by Goldman Sachs and Westpac, which use generative AI to help developers automatically generate lines of code, resulting in a 46% productivity increase, are promising.
NatWest has added generative AI capabilities to its Cora chatbot, aiming to create more human-like interactions. Banks are also exploring the use of AI for customer-facing products, such as chatbots.
In conclusion, while AI is transforming banking, businesses and individuals conducting significant FX transactions often benefit from using dedicated FX service providers who offer better rates, tailored strategies, and enhanced customer support. The comparison of banks' FX pricing worldwide was not discussed in this article, but specialized providers consistently outperform traditional banks on cost and service quality in 2024.
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