Generative AI emerging as promising technology for lending institutions

Amidst an air of caution amongst clients’ discretionary spends, IT companies are leveraging Generative AI to overcome these headwinds. As Generative AI is likely to hasten the return on investment (RoI) from the discretionary spends, clients have started experimenting with discretionary smaller deals on Generative AI, said experts.

This was also indicated by Accenture, known as the trendsetter for Indian IT services companies, during an earnings call. Accenture during its third quarter result of FY23, said that it is likely to get more business opportunities using Generative AI to address the pressure on small and discretionary spends.

After its discretionary and small deals’ momentum fell in the third quarter of FY23, the Irish-American IT major’s CEO, Julie Sweet, said, that clients are weighing the value of their investments in short term.

“And so we’re working hard on finding new ways to get value to them faster. That’s where the GenAI, for example, comes in. And so over the next quarter, we’re going to be developing new opportunities, new campaigns, new ways of pushing out our investments in GenAI to help us address the small deal pressure that we’re seeing.” Accenture has sold over 100 Generative AI projects over the last four months.

Last week, Infosys CEO Salil Parekh, during annual general meeting, said, recently the company has launched Topaz, that is encompassing all of AI and especially generative AI capabilities. “We have today 50 active client projects where we are using generative AI.”

While large deals are good for IT companies as they provide a revenue pipeline for a long term, small and short term deals leads to faster revenue conversion. Large deals also carry a risk of large deal timelines witnessing near term leakages because of ramp down and postponement from client side. It is here that short term and small deals come to the rescue by providing faster revenue conversion.

According to Capgemini Research Institute’s latest report, ‘Harnessing the value of generative AI: Top use cases across industries’, 40% of organisations across industries have already established teams and budget for the technology, with a further 49% contemplating doing so within 12 months. The report further added, that with successful implementation of generative AI, executives foresee a range of benefits – from increase in sales, decrease in costs, along with improvement in both customer engagement and satisfaction, and operational efficiency.

Motilala Oswal said in a report about Accenture that the momentum for small deals (largely discretionary in nature) remained muted in 3QFY23. Demand for small discretionary deals is expected to remain muted until caution among clients moderates.”

It added that generative AI could boost near-term spending on digital transformation, as only 10% of enterprises have enough mature capabilities to implement generative AI.

Ramkumar Ramamoorthy, Partner, Catalincs, a growth advisory firm, said, “Clients do not hold back on discretionary tech spend if they have a strong business case for growth, differentiation and leadership. New technologies such as generative AI can make a difference to multiple functions within a company and hence is an area prime for strategic investment.”

Suryadip Shoshal, Chief Analytics Officer and Co-Founder, Think360.AI, an AI and analytics firm catering to BFSI sector, said, “Generative AI has emerged as a promising technology for banking and lending institutions, offering various applications and use cases, prominently on improving customer servicing, risk assessment, and improving internal reporting.” He added, large organizations even in India are beginning with multiple small-scale pilots before committing to larger transformative projects. Financial Express