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Financial Services Will Embrace Generative AI Faster Than You Think
Report

Financial Services Will Embrace Generative AI Faster Than You Think

Anish Acharya, Sumeet Singh, Angela Strange, Alex Rampell, Marc Andrusko, Joe Schmidt, David Haber and Seema Amble
a16z, 2023
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Editorial Rating

8

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The implications of generative AI for financial services are huge, say analysts at Andreessen Horowitz in this timely and educational report. Financial institutions are already using AI to synthesize massive amounts of data to make better decisions in credit allocation, risk management, compliance and reporting, but generative AI will be a game-changer for the industry. However, the authors warn, the human element will remain critically important in ensuring AI works for the benefit of firms and customers alike. This astute recap is required reading for financial professionals and executives.

Summary

Historical financial data will be rich fodder for generative AI.

The ability to harness large language models (LLMs) to learn and process reams of unstructured data, along with enormous computing power, has given a major boost to financial services providers. While most financial firms are already using existing data to predict outcomes and classify risk, generative AI has the potential to create fresh content for clients and providers.

When it comes to generative AI, both legacy institutions and fintech newcomers have competitive advantages and disadvantages. The former can rely on a massive amount of existing financial data, but they will face issues in regard to accuracy and privacy concerns. The latter may need to resort to publicly available data to teach their LLMs, but they should be able to generate proprietary data rapidly.

Generative AI offers financial institutions opportunities in five major areas: clients, operations, compliance, risk and forecasting.

Firms will...

About the Authors

Anish Acharya et al. are professionals at Andreessen Horowitz.

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