Gen AI is everywhere – Are you ready?

If there’s one trend that’s top of mind for banking leaders today, it’s Generative AI. Temenos’ recent global study, gathering perspectives from 420 business and technology leaders in financial services, revealed that 75% of banks are exploring Gen AI.

36% have already deployed or are in the process, while another 39% are considering opportunities.

The train is about to leave the station, and every bank that wants to succeed in the future must get on board. This means educating themselves now and preparing for implementation tomorrow.

However, 64% of banks have not yet begun to use Gen AI. So it’s not too late to take the leap. It also highlights the challenges banks face, which I believe fall into three broad categories.

Security and Oversight

Our survey revealed that 86% of banks have concerns about data protection when it comes to Gen AI. At the same time, 59% are concerned about hallucinations – where the AI provides inaccurate results.

These concerns are significant. Customer data held by banks is highly sensitive, and the consequences for inaccurate AI results are much higher than in many other industries. This shows the clear need for responsible AI within banking. The AI must be explainable, and banks need to balance a human touch in the process, to ensure that interactions remain differentiated and build trust with customers.

Implementation strategy

A second challenge for banks is exactly where and how to implement Gen AI.

There are two broad approaches. One is systematic, where Gen AI is pervasive throughout the business. But are banks ready for the organizational impact such a transformative change would bring on how all their employees work?

On the other hand, AI could be introduced more gradually by use case. Would they see faster ROI by implementing incrementally on specific projects, such as fraud detection? But, would they lose ground if their competitors employed the systematic approach?

These questions need to be addressed before adoption can happen at pace. Leaders feel their workforces need more preparation, with 62% saying investment in training programs on how to use Gen AI would drive adoption. And 58% want more clarity on which use cases would be valuable for their customers and employees.

A world of regulation

I recently attended a roundtable by French Tech San Francisco, exploring how companies can navigate the evolving Gen AI regulatory landscape across the US and EU.

My key takeaway was the challenge banks face in interpreting the law and implementing it in their product.

The US landscape is complex, consisting of a patchwork of different laws and regulations, varying between Federal and State levels, and even by industry. The EU’s risk-based AI Act does bring more uniformity, but Gen AI faces increased regulation, and many areas like AI liability are yet to be fully defined.

It follows that 60% of our survey respondents had legal concerns with Gen AI. Almost the same (61%) said regulatory guidelines on usage would drive adoption.

Interestingly, 37% of respondents were concerned by lack of support from Legal, Risk and Compliance. While larger companies can draw on these functions when designing products in this complex landscape, smaller banks do not have access to the same level of resources.

This challenge highlights something important. To successfully navigate something as complex and transformational as Gen AI, banks need to share best practices and leverage the power of community.

And that’s where Temenos comes in.

Community matters

Temenos supports our customers in two ways.

Firstly, through our secure, scalable, and responsible AI solutions, we support either a systematic or use-case based AI strategy.

We work closely with leading hyperscalers like Microsoft and AWS, so banks can adopt GenAI across cloud and SaaS. And because our deployment options are flexible, banks can also run on-premises infrastructure. We recently announced a collaboration with NVIDIA to power on-premises GenAI with exceptional speed, delivery, privacy and control.

But our value goes further.

The challenges we’ve explored above are bigger than any one bank, no matter their size. It requires learning from the experiences, ideas and successes of others to build the way forward. This is what our Temenos Community Forum offers.

Now in its 25th year, over 1,400 global banking industry experts, practitioners, and leaders will come together in Madrid between 20-22 May. Bold ideas on Gen AI technology will drive the agenda, with engaging sessions, customer stories, and multiple opportunities to exchange with experts and peers. This includes our new roundtables, where banks will be able to share best practices and discuss insights and solutions to the complex challenges they face.