Big tech companies are betting that a new wave of smaller, more accurate AI models will be more effective when it comes to the needs of businesses in industries such as law, finance and healthcare.
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LONDON – More and more financial services firms are touting the benefits of artificial intelligence when it comes to increasing productivity and overall operational efficiency.
Despite bold statements, many companies are failing to deliver tangible results, according to Edward J Achtner, head of generative AI at the British banking giant. HSBC.
“Frankly, there’s a lot of success theater out there,” Achtner said in a panel at the CogX Global Leadership Summit alongside Ranil Boteju – a co-AI leader at rival British bank Lloyds Banking Group – and Nathalie Oestmann, head of NV Ltd, a consultancy firm for venture capital funds.
“We have to be very clinical in terms of what we choose to do, and where we choose to do it,” Achtner told attendees of the event, held earlier this week at the Royal Albert Hall in London.
Achtner outlined how the 150-year-old credit institution has embraced artificial intelligence since ChatGPT – the popular AI chatbot from Microsoft-backed startup OpenAI – burst onto the scene in November 2022.
HSBC’s AI leader said the bank has more than 550 use cases across its business lines and functions related to AI – ranging from combating money laundering and fraud using machine learning tools to supporting knowledge workers with newer generative AI systems.
One example he gave was a partnership HSBC has with internet search company Titan Googling on the use of AI technology to combat money laundering and reduce fraud. That collaboration has existed for several years, he says. The bank has also delved deeper into genAI technology recently.
“When it comes to generative artificial intelligence, we need to clearly separate that” from other types of AI, Achtner said. “We approach the underlying risk related to generative very differently because, while it represents incredible potential opportunities and productivity gains, it also represents a different type of risk.”
Achtner’s comments come as other financial services industry figures – particularly leaders at start-up companies – have made bold statements about the level of overall efficiency gains and cost savings they see from investing in AI.
Buy now, pay later Klarna says it has used AI to offset lost productivity due to workforce declines as employees leave the company.
It is implementing a companywide hiring freeze and has reduced its total workforce from 5,000 to 3,800 — a headcount reduction of about 24% — with the help of AI, CEO Sebastian Siemiatkowski said in August. He wants to further reduce Klarna’s workforce to 2,000 staff – without specifying a time for this goal.
Klarna’s boss said the company is cutting overall headcount against the backdrop of AI’s potential to have “a dramatic impact” on employment and society.
“I think politicians today already need to consider whether there are other alternatives in how they can support people that could be effective,” he said in an interview with the BBC at the time. Siemiatkowski said it was “too simplistic” to say that the disruptive effects of AI would be offset by the creation of new jobs thanks to AI.
Oestmann of NV Ltd, a London-based firm that offers advisory services to the C-suite of venture capital and private equity firms, directly addressed Klarna’s actions, saying headlines about such AI-driven staff cuts are “not helpful” .
Klarna, she suggested, likely saw that AI “makes them a more valuable company” and consequently incorporated the technology as part of plans to reduce its workforce anyway.
The outcome Klarna sees from AI “is very real,” a Klarna spokesperson told CNBC. “We are publishing these results because we want to be honest and transparent about the impact genAI is having in the real world at companies today,” the spokesperson added.
“Ultimately,” Oestmann added, “as long as people are “educated properly” and banks and other financial services companies can “reinvent themselves” in the new AI era, “it will only help us evolve.” She advised financial companies to “constantly learn in everything you do.”
“Make sure you try these tools, make sure you make this part of your daily life, make sure you’re curious,” she added.
Boteju, Chief Data and Analytics Officer at Lloyds, pointed to three key use cases the lender sees related to AI: automating back-office functions such as coding and technical documentation, human-in-the-loop uses such as pointers for sales staff, and AI-generated responses to customer questions.
Boteju emphasized that Lloyds is “proceeding with caution” when it comes to exposing the bank’s customers to generative AI tools. “We want to get our guardrails in place before we actually scale them up,” he added.
“Banks in particular have been using AI and machine learning for about 15 to 20 years,” Boteju says, indicating that machine learning, intelligent automation and chatbots are things that traditional lenders have “been doing for a while.”
Generative AI, on the other hand, is a more emerging technology, according to the Lloyds director. The bank is increasingly thinking about how to scale that technology – but by “using the current frameworks and infrastructure that we have,” rather than by significantly moving the needle.
Boteju and Achtner’s comments echo what other financial services AI leaders have said previously. Speaking to CNBC last week, ING Chief Analytics Officer Bahadir Yilmaz said AI is unlikely to be as disruptive as companies like Klarna suggest with their public messaging.
“We see the same potential as them,” Yilmaz said in an interview in London. “Just the tone of the communication is a little different.” He added that ING mainly uses AI in its global contact centers and internally for software engineering.
“We don’t need to be seen as an AI-driven bank,” says Yilmaz, adding that in many processes, lenders won’t even need AI to solve certain problems. “It’s a very powerful tool. It’s very disruptive. But we don’t necessarily have to say that we put it as a sauce on all the food.”
Johan Tjarnberg, CEO of Swedish online payments company Trustly, told CNBC earlier this week that AI “will actually be one of the biggest technological levers in payments.” Still, he noted that the company is focusing more on the “basics of AI” rather than transformative changes like AI-based customer service.
One area where Trustly is looking to improve the customer experience with AI is subscriptions. The startup is working on an “intelligent fee mechanism” that aims to determine the best time for a bank to receive payments from a subscription platform user, based on their historical financial activities.
Tjarnberg added that Trustly is seeing 5-10% improved efficiency as a result of implementing AI within its organization.