According to a recent IDC report titled "Generative AI in Retail Banking: Opportunities and Use Cases," the future of retail banking is set to experience a significant transformation.
The report details the integration of Generative AI (GenAI) with data management and core banking systems, which is expected to result in a radical shift in retail banking. Recent surveys affirmed that 41% of retail bankers in the Asia Pacific region are interested in investing specifically in GenAI.
Ashish Kakar, Research Director at IDC Asia Pacific Financial Insights, commented on the potential of GenAI, stating, "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 introduces 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."
The IDC report identifies several ways GenAI would be instrumental in reshaping different aspects of retail banking, such as products, CX, and profit capabilities.
The report emphasises the role of GenAI in generating complex content that customises retail experiences across complete customer journeys. Key areas predicted to have a high impact and consequently require focus are knowledge management, fraud detection, loan acquisition, and rewards dynamics.
The IDC report prioritises the GenAI use cases and best practices in the Asia Pacific region and it points out six significant customer journeys: acquisition, onboarding, transaction processing, servicing, portfolio management, and risk management and collections.
Xiao Liu, Research Manager at IDC Asia Pacific Financial Insights, remarked on the interaction between retail banks and GenAI vendors, "We have observed that the majority of retail banks prefer working with GenAI vendors that offer flexibility and can accelerate their GenAI journey."
"It is essential for retail banks to begin by accessing GenAI applications and pre-trained models, enabling a better understanding of the benefits and impacts of GenAI. Subsequently, they can proceed to customise or fine-tune their own models based on their specific requirements."
The research presented in the IDC report provides foresight on GenAI use cases for retail banking and suggests several AI and GenAI use cases that could lead to significant growth and efficiency opportunities, particularly focusing on various aspects of the retail customer journey.
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