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Generative AI set to transform retail banking in Asia-Pacific

In a recent IDC report titled Generative AI in Retail Banking: Opportunities and Use Cases, the rise of the GenAI-driven bank of the future is predicting a radical shift in retail banking through the seamless integration of Generative AI with data management and core banking systems. Recent IDC surveys (IDC’s 2023 Future Enterprise Resiliency and Spending Survey, Wave 6) indicate that 41% of retail bankers in Asia/Pacific are inclined to make specific GenAI investments.

“GenAI is the next game changer for retail banks. It not only enables unstructured data to be included in the decision-making process but also brings in multiple new algorithms with the help of synthetic data. It has a game-changing ability in the generation of artifacts, such as images, text, and voice, which enable an instant gratification experience,” says Ashish Kakar, Research Director, IDC Asia/Pacific Financial Insights.

In the report, IDC identifies GenAI use cases being explored by financial institutions and discusses the potential impact of GenAI on the bank of the future:

  • The GenAI-Driven Bank of the Future: GenAI plays a central role in transforming every aspect of retail banking, encompassing tools, products, customer experience (CX), and profitability.
  • GenAI-Powered Customer Journeys: Although there are many ways AI, in general, and GenAI, in particular, can impact the retail bank, the most important aspect is on GenAI’s ability to generate complex content that customizes retail experiences across the end-to-end customer journey.

In the report, IDC prioritizes the GenAI use cases and the best practices in the Asia/Pacific region across six key customers journeys: acquisition, onboarding, transaction processing, servicing, portfolio management, and risk management and collections.

The areas with the greatest potential impact and should be given priority and focus are knowledge management, fraud detection, loan acquisition, and rewards. With the exciting opportunities GenAI presents for retail banking, vendors need to communicate the benefits and the costs associated with investments in AI in general and GenAI in particular, as even for the largest banks, building LLMs requires a considerable amount of effort.

“We have observed that the majority of retail banks have a preference for working with GenAI vendors that offer flexibility and can accelerate their GenAI journey. It is essential for retail banks to begin by leveraging the easiest way to access GenAI applications and pre-trained models, enabling them to understand the benefits and impacts of GenAI. Subsequently, they can proceed to customize or fine-tune their own models based on their specific requirements,” says Xiao Liu, Research Manager, IDC Asia/Pacific Financial Insights. IDC

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