Investment banks can benefit from generative AI in multiple ways
Investment banks are increasingly turning to generative AI to enhance their operations and boost productivity. While AI and automation have been utilized in the industry for years, the potential of large language models (LLMs) and generative AI to revolutionize various functions across the transaction life cycle is becoming more apparent.
Recent studies have shown that generative AI can significantly improve productivity in financial services. For example, a study by Stanford researchers found that generative AI increased a call center’s productivity by 14%. Another study by MIT concluded that generative AI helped reduce time and improve work quality for marketers, consultants, and data analysts.
Major players in the industry are already exploring the benefits of generative AI. JPMorgan Chase has applied to trademark a product called “IndexGPT” for investment advice, while Wells Fargo is using LLMs to enhance regulatory reporting and business processes. Federal Reserve researchers have also found that GPT models can effectively analyze and classify Federal Open Market Committee announcements.
Vendors like Bloomberg and Pitchbook have also introduced AI-powered tools tailored for finance, further highlighting the growing interest in generative AI within the investment banking sector.
Generative AI is expected to have a significant impact on front-office operations in investment banking. By automating tasks such as content creation, analysis, and decision support, generative AI can help professionals in marketing, sales, research, and trading improve their efficiency and productivity. Goldman Sachs is already leveraging generative AI to assist developers in creating code more efficiently.
Overall, the use of generative AI is projected to increase front-office productivity by 27% to 35% by 2026, leading to additional revenue per employee. With the potential for substantial gains in efficiency and revenue, investment banks are increasingly embracing generative AI to stay ahead in a rapidly evolving industry.