Building Trust in GenAI – Financial Services
GenAI is playing an increasingly important role in improving the agility and accelerating the digital transformation of financial services (FS) organizations, while driving growth and enhancing customer experience.
Even though FS leaders are excited about GenAI’s potential, with 97% investing in GenAI in the next three years according to a recent KPMG GenAI survey, they are also concerned with associated risks. Seventy-seven percent of the FS respondents to the survey cited data privacy and security risk as the top concerns when working with partners on GenAI.
The 2024 KPMG U.S. CEO Outlook Survey also showed that GenAI remains a top investment priority with U.S. CEOs, but data, workforce and governance readiness along with a lack of regulations are considered implementation challenges. Specifically, CEOs expressed low levels of confidence that they will have their data ready to safely and effectively integrate GenAI (34%), their employees having the right skills to fully leverage the benefits of GenAI (39%) and their organization being ready to safely deploy and integrate GenAI with robust governance frameworks (56%).
What can FS leaders do today to solve for the challenges with GenAI implementation and start building trust in its use within their organizations?
1. Establish a strong governance network – An AI steering committee can direct GenAI efforts across the organization. Members have the ability to ensure that the execution of the GenAI strategy is planned, coordinated, and carried out in accordance with their organization's tolerance for risk. The committee can also assist in maintaining a balance between innovation, adaptability, risk control, and oversight, thereby facilitating the development of policies that are thorough and adaptable.
2. Create an AI Center of Excellence – The establishment of an AI Center of Excellence (COE) can play a crucial role in promoting cultural alignment, education, and adoption of AI. Additionally, the COE can provide guidance to leaders on utilizing established governance processes to expedite evaluation, identify necessary actions for risk mitigation, and obtain necessary approvals. The COE can also oversee the implementation of AI and reassess the level of risk associated with third-party involvement.
3. Rethink ways to onboard new GenAI models – Redesign the intake process for new GenAI models. The intake process should incorporate instructions on sustainability and security, along with a comprehensive review and approval procedure prior to development or implementation. Conducting evaluations at the outset helps prevent the introduction of new risks that may not be covered by the organization's existing vendor onboarding process.
4. Addressing model and non-model risk – Per SR-11-7, FS organizations have a robust governance in place for models. However, many did not account for GenAI in their non-model risk assessments. By categorizing, prioritizing, and aligning risks associated with GenAI with the organization's risk tolerance policies, leaders in the financial services industry can effectively allocate resources to address the most critical issues. Additionally, they can expedite the approval process for projects that are deemed to have lower potential for significant problems. This approach helps organizations establish the necessary trust to make informed decisions regarding the implementation of GenAI solutions.
In all, by establishing a strong framework, gaining a thorough understanding of the risks, and ensuring organizational alignment, FS organizations can implement GenAI projects on a large scale with confidence – consequently accelerating their digital transformation, enhancing customer experience and facilitating growth.
For more information on how financial services organizations are embracing GenAI, please click here.