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 long been utilized in various functions within investment banking, the potential of large language models (LLMs) and generative AI to revolutionize the industry is becoming more apparent.
Recent studies have shown promising results in terms of the impact of generative AI on productivity. From boosting call center productivity to improving the quality of work for marketers, consultants, and data analysts, the technology is proving to be a game-changer. It can level the playing field and help lower-skilled employees improve their outputs and productivity.
Numerous proofs-of-concept (POCs) and experiments are currently underway in the industry. Major players like JPMorgan Chase and Wells Fargo are already leveraging generative AI for investment advice and regulatory compliance, respectively. Federal Reserve researchers have also found that GPT models can outperform other methods in deciphering complex financial language.
Vendors to investment banks are also investing heavily in generative AI technology. Bloomberg and Pitchbook have launched their own AI-powered tools tailored for finance, showcasing the growing interest and potential in this area.
In the front-office operations of investment banks, generative AI is expected to have a significant impact. From marketing and sales to decision support and trading, the technology can streamline processes, reduce costs, and enhance analytical capabilities. Goldman Sachs, for example, is using generative AI to help developers create code more efficiently.
Overall, the use of generative AI is projected to boost productivity for front-office employees by as much as 27%–35% by 2026. This translates to significant additional revenue per employee, highlighting the potential financial benefits of integrating AI into investment banking operations. As the technology continues to evolve and improve, investment banks stand to gain even more from embracing generative AI in their day-to-day operations.