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Revamping asset management. Generative AI (gen AI) is transforming asset management, with far-reaching effects on companies, policies, and practices, an academic leader reflects in the Financial Times. In the future, employees may routinely use gen AI tools to customize investment portfolios, address risks, and even produce new asset classes. This may significantly change how the industry is structured, with companies that fail to grasp the potential uses of AI falling further behind. [FT]
AI-powered financial fraud. Gen AI tools are making it easier for fraudsters to draft persuasive phishing emails, produce phony IDs, and even use deepfakes to impersonate executives, CNBC reports. A 2023 survey from the Association of Financial Professionals found that in 2022, nearly two-thirds of respondents encountered attempted or successful financial fraud. It also found that larger companies are more likely to fall prey to email scams. Companies are creating customized gen AI platforms to recognize criminals’ “mule accounts,” which hold stolen money. [CNBC]
Embracing gen AI. As banks and other financial institutions move to quickly find uses for gen AI, challenges are emerging. Getting gen AI right could produce enormous value; getting it wrong, however, could be costly. Financial institutions that use centralized gen AI operating models are reaping the biggest rewards, McKinsey senior partner Kevin Buehler and coauthors reveal. A recent review of 16 of the largest financial institutions in Europe and the US found that more than 50% have adopted a more centrally led organization for gen AI.
Benefits of centralization. Centralization allows enterprises to focus on a handful of use cases, rapidly moving through experimentation to implement them widely. About 70% of banks and other institutions with highly centralized gen AI operating models have progressed to putting gen AI applications into production. Consider four types of gen AI operating models that financial institutions are using as they implement the technology and visit McKinsey Digital to see how leaders are turning technology’s potential into value for their companies.
—Edited by Belinda Yu, editor, Atlanta
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