Monday, July 22, 2024

Fifty One Degrees’ Study Reveals Generative AI’s Strategic Advantage in Financial Services

In a groundbreaking analysis, Fifty One Degrees has determined that an overwhelming 84.6% of banking, insurance, and FinTech operations could see significant improvements from AI technology adoption, potentially boosting the sector’s economic output by £41.7bn.

  • 8 in 10 tasks will be made more efficient by deploying AI, whereas just over half of tasks will be higher quality where AI is used.
  • GenerativeAI (GenAI) is the most powerful AI technology for financial services, and GenAI Assistants would benefit 74.9% of tasks.
  • The greatest efficiency gains will be for internally focused tasks and processes, as opposed to customer-facing tasks, with an efficiency gain of 41% for internal tasks, and 34% for customer-facing. 
  • GenAI is expected to increase economic output in financial services by up to 15%, resulting in an additional £41.7bn of additional output from the sector.

Insights from Fifty One Degrees:

On 19 March 2024, AI consultant firm Fifty One Degrees unveiled a research study indicating the vast potential of generative AI technology within financial services firms.

This thorough investigation analysed 311 tasks across fourteen different functions within the financial industry, assessing the suitability and potential benefits of AI technologies for each task.

GenAI’s Transformative Impact in the Financial Realm

The findings suggest that GenAI Assistants, tailored to assist team members in specific functional areas, could positively influence three-quarters of tasks in financial and insurance companies. These assistants, trained on specific organisational procedures and regulations, are particularly valuable in roles involving substantial processing of natural language data, such as Compliance and Legal, potentially leading to workflow automation or enhancements.

Moreover, the study identifies other AI tools, such as AI-enabled training and legal aids, powered by Generative AI and Large Language Models, as significant, affecting 39% of activities.

Broader Implications and Economic Prospects

The research points to significant benefits for departments such as Analytics, Technology, Customer Services, and Underwriting through the application of GenAI, enhancing both efficiency and work quality. Although departments like Compliance and Legal are likely to see notable efficiency gains, the rate of quality improvement might not parallel this growth.

The economic implications of GenAI adoption in the banking and financial services industry are substantial, with a potential increase in economic output of 15%, thereby generating an impressive £41.7bn in additional sector value.

Perspective from Fifty One Degrees’ Leadership

Recent research estimates that Generative AI will drive $2.6 trillion to $4.4 trillion annually in value for global companies. Within Financial Services and Insurance, that figure is $200 billion to $340 billion, which is equivalent to 9 to 15 per cent of operating profits.  The UK financial services and insurance industries produce £278bn of economic output. A 15% boost would generate a staggering £41.7bn of additional economic output. Further, the UK financial services industry equates to 8.3% of the entire UK economy and 2.5 million people are employed in the sector. Therefore, any gains made by financial institutions would have far-reaching impacts across the wider UK economy.
Commenting on the study, co-founder and CEO of Fifty One Degrees, Nick Harding said “The UK financial services industry is a powerhouse that fuels the local economy by servicing consumers and businesses, but is also the UK’s biggest export. Enabling this industry, which is so critical to our collective success, to remain at the forefront of technology is something we’re passionate about. Assertively adopting generative AI will enable UK financial services to grow further, enabling this vital sector to remain a global leader.

And this is just the beginning. This study represents the generative AI technology and tools that are available today. What we’ve experienced is rapid development and evolution of the technology and its capabilities, meaning the opportunity for businesses to benefit will only increase.”
Elliot is the Editor at ABCMoney. He manages a team that writes and contributes to many leading publications across a number of industries.

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