PwC and Microsoft: Banking Horizons event series

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How we're enabling success in the banking sector - convening leaders from the industry through our Horizons event series, to help navigate the opportunities and challenges being faced year-round.

Horizons breakfast event - The GenAI enabled bank of the future

Some recent technology trends, from blockchain to the metaverse, have fallen short of living up to their accompanying hype. But GenAI looks very different — and the evidence is overwhelming. Take how OpenAI’s large language model (LLM) ChatGPT has entered everyday life for hundreds of millions of people. It’s the fastest-ever growing app, and by some distance. Overall, GenAI is predicted to drive a 7% increase in global GDP by 2030 alone. The implications across every industry are profound. The question for banks? How can they harness the technology to create the best results for their customers, people, investors and wider society?

“Your job will not be taken by AI. But your job will be taken by someone who knows how to use AI.”

Banks’ unique GenAI challenge

All organisations are eagerly exploring GenAI’s possibilities. And all of them face some common challenges to make the most of the tech. But banking’s unique operating context creates an additional layer of complexity. Strict regulatory and compliance requirements mean that banks and financial institutions have additional hurdles to overcome. Legacy technologies still make up a considerable proportion of banks’ IT estates. Little wonder then that banking and financial services institutions are generally further behind on the GenAI adoption curve than their peers in other industries.

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2:56

Horizons breakfast event

Continuing the thought-provoking conversation from the Banking Horizons Summit, we discussed the latest innovations and industry insights and covered critical questions such as, what’s the hype and what is actually on the horizon for Gen AI?

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But as banks’ momentum towards GenAI accelerates, getting their organisations ready means leaders need to focus on three priorities:

Productivity - Human-led, tech-powered

Every bank will be able to find hundreds – or even thousands – of specific use cases for Gen AI. The problem with that approach? It’s too narrow to realise the types of returns on investment that banks could be achieving. So rather than thinking about individual use cases, banks need to widen the aperture to consider an entire value chain. GenAI has the potential to transform end-to-end business processes rather than specific tasks or activities. Instead of looking at elements of, for example, the loans process, banks should scrutinise the entire loan value chain to rethink the delivery of products and services from the ground up.

Banks need to make sure that they take their people with them on the GenAI journey ahead. Headline figures suggest that 80% of roles will, in one way or another, experience a degree of impact from GenAI. But GenAI will also create entirely new jobs. Accordingly, banks will need to think carefully about how they reskill their people to prepare for what’s coming. A new approach to organisational design will be essential to integrate GenAI and understand how it changes operating models across the enterprise.

“HR are fundamentally involved in a lot of the conversations that we are having in this space.”

But perhaps most powerful of all is GenAI’s ability to transform how we work and the way it will reshape roles. Take wealth advisory services, for example. For some banks, AI is already realising significant productivity gains across routine activities. The savings can be redirected to enable people to spend more time engaging with customers, understanding their needs, and offering relevant products and solutions.

Gen AI, and more specifically LLMs that use natural language inputs, are also democratising access to insights and data capabilities that were only previously available to specialists and data scientists. GenAI’s ability to empower must be tempered with the new risks it could create. Having a human in the loop to validate and authenticate its outputs remains an imperative.

“You’ve got to educate your teams, period. They’re the key to unlocking value.”

One prerequisite for harnessing the power of Gen AI? Data. Building GenAI models such as Large Language Models (LLMs) requires significant quantities of high quality, well organised data. Assembling and managing those vast data sets is a non-negotiable task, but many banks are still struggling to both identify where all their data resides today and find ways to bring it together from across the business so that it adds real value.

The cloud has a key role to play here. And many banks are still pursuing the cloud transformations that are fundamental to the use of GenAI, with the proportion of financial services compute in the cloud still relatively low compared with other industries. Many banks are still in the process of transformation to address a substantial legacy technology estate and move decisively to cloud. Accelerating those journeys is vital to also speed up progress to realising GenAI’s promise.

“Do not underestimate the necessity of getting your data house in order.”

Banking Horizons Summit 2023

For the UK’s banks, today’s environment could hardly be more challenging. Economic and geopolitical volatility is rising. Pressure to assist in tackling climate change is constant and growing. And levelling up remains a promise yet to be fulfilled.  

But there’s cause for optimism, too. Tech advances like generative AI, cloud and advanced analytics offer new ways to tackle big global challenges. A shared sense of purpose is bringing finance and tech together to address climate change and expand financial inclusion. And businesses in both sectors recognise that they need to play an increasingly key role in training and developing new skills to reignite economic growth.

The many major challenges facing business and society today will only be solved through collaborative, cross-sector working. And for the banking and tech sectors in particular, success depends on formulating and executing a growth strategy that simultaneously creates value, navigates risk, and delivers sustainable outcomes for customers, employees, investors and society.

Investment in technology is critical in achieving all these goals. But it must be guided by human ingenuity, expertise and understanding.

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3:44

Banking Horizons Summit 2023

PwC and Microsoft's Banking Horizons Summit was a collaboration of minds from across business, seeking each other out, creating new connections, and innovating to solve problems.

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Gold Microsoft Partner

Human-led, tech-powered

It’s estimated that advances in AI will see 21% of today’s financial services workforce displaced by 2030. But research by PwC, the World Economic Forum and the Financial Services Skills Commission suggests that reskilling the workforce could boost global GDP by $6.2 trillion in the same period. However, 71% of CEOs worry they don’t currently possess – and won’t be able to find – the skills their business needs for the future.

“Leaders need to think about employee engagement with the same strategic importance as financial and business outcomes.”

The solution is to build a working culture and employee experience that combines the innovation, insight and empathy of people with the power of technology. Technologies such as generative AI will play a pivotal role, unleashing creativity, unlocking productivity, and enabling people to acquire new skills. In turn, this will lead to greater employee engagement, and more resilient, higher-performing businesses.

“Are you speaking to your employees about the new technologies that you want to invest in? Are you getting them ready for changing their ways of working? If you're not, you're doing something wrong.”

Realising these outcomes requires financial services leaders to invest in two key areas. The first is development opportunities. These are the reasons why employees feel connected to an organisation’s culture. Lack of development opportunities is often the main reason why more than half of financial services employees who leave their organisation decide to do so. The second is purpose. This is the number one driver of performance and productivity, above compensation. Leaders need to better communicate purpose, to drive it through every level of their organisation.

The great talent reshuffle is coming. Businesses that don’t start investing in their employee experience and culture risk losing out.

Contact us

Mark Batten

Mark Batten

Banking and Capital Markets Leader, PwC United Kingdom

Tel: +44 (0) 7740 242449

John Lyons

John Lyons

Partner, Cloud and Digital Transformation Lead, PwC United Kingdom

Tel: +44 (0)7590 351933

Peter Almond

Peter Almond

Alliance Director, PwC United Kingdom

Tel: +44 (0)7793 758029

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