T Three Strategic Insights for Secure and Intelligent AI Implementation By Connor Heaton, Director of Artificial Intelligence, SRM The advent of generative artificial intelligence (AI) and large language models (LLM), like OpenAI’s ChatGPT, is significantly disrupting the financial services landscape. Previous applications of AI in banking focused on purpose-built use cases such as fraud detection, loan decisions and marketing strategies. However, the emergence of generative AI solutions represents a significant shift, enabling financial institutions to complete hundreds of disparate tasks. Generative AI and LLMs have democratized the field, making AI widely available, cost-effective and intuitive to apply across several domains. This increasing pervasiveness and accessibility necessitate the need for financial institutions to implement strategic policies and tools to control AI usage. AI Integration Brings Risks While generative AI offers many benefits, financial institutions must be wary of inherent risks. It is estimated that three in four employees are using AI tools secretly, which can increase the vulnerability of sensitive data. Despite AI assistants being versatile tools, they often lack specialized context, requiring financial institution employees across all roles to receive additional training to ensure all outputs are accurate and avoid bias. AI is also changing the fraud landscape as data leakage poses a significant threat to financial institutions of all sizes. Although banks and credit unions have effectively combatted fraud in the past, AI allows malicious actors to conduct crimes quicker and more effectively. Since generative AI tools are easily accessible, any data entered by employees and vendors can be extracted by criminals or exposed during a data breach. Account holders are particularly vulnerable, lacking the means and experience to identify fraudulent schemes adequately. This is prompting financial institutions to invest resources into customer education and processing design, helping to reduce vulnerability to known fraud methods. Vendor Selection Becomes a Priority Selecting the appropriate generative AI vendor can be overwhelming, considering how saturated the market has become. There are countless variations and productizations of LLMs, and staying informed on the vendor space can be resource-intensive for both banks and credit unions. The vendor selection process may seem daunting, but financial institutions can simplify this process in several ways. Although thousands of product offerings are on the market, Colorado Banker 22
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