ChatGPT: boon or bane for banking industry?

The Korea TimesThe financial sector in Korea is upbeat about adopting ChatGPT, an up-to-date artificial intelligence (AI) chatbot programmed for human-like conversation, as part of the industry’s move to accelerate digitalization.

A string of executives and researchers at the banks have listed possible services that can be made more efficient, convenient and secure using ChatGPT since it was introduced by U.S. research lab OpenAI in November 2022.

The aforementioned services range from client consultation around the clock to automatic and swift process of documentation jobs, personalized financial planning services and wealth management as well as risk management and fraud detection.

“Generative AI in the form of the chatbot is drawing huge attention in the banking industry,” Woori Financial Group Senior Vice President Oak Il-jin said during a seminar hosted by the Korea Credit Information Service in mid-May to discuss how the domestic finance sector can enhance competitiveness using AI.

Oak was referring to ability of ChatGPT to take and process input data and produce an array of responses to complex questions.

In a report, titled “A changing future of the finance industry with introduction of ChatGPT,” Hana Institute of Finance researcher Kim Ji-hyun forecast ChatGPT “has been accelerating the AI boom across the industry”

Kim assessed the use of AI is in its “nascent stage” among financial firms in Korea but can be applied for various tasks.

Citing the Korea Credit Information Service, the researcher forecast AI-based financial businesses will grow by 38 percent annually.

The major banks here have been currently running online client consultations using a basic, conversational program.

The program was developed using AI and is thus called a chatbot in some sense. Industry sources, however, say it clearly lags behind ChatGPT because it is only designed to answer a limited range of questions that are preprogrammed while ChatGPT can actively use the input data to generate creative feedback.

“Accordingly, the quality of online client consultation is anticipated to improve as a chatbot can analyze conversations with customers and update relevant data,” Kim said.

Concerning documentation jobs, ChatGPT is expected to increase productivity and save costs as it will require less human resources in writing reports and contracts as well as sending mass e-mails and text messages.

In a separate report, Lim Ji-ho of the Industrial Bank of Korea (IBK) projected ChatGPT can track customers’ banking transaction records, figure out their needs and offer tailor-made financial products.

Concerning security, Lim viewed ChatGPT can learn patterns of customers’ behaviors and thus protect them from cybercrimes when abnormal attempts are made online using account numbers and other private information belonging to them.

Asked about the progress on adopting ChatGPT, the banks, however, said there are security risks to be resolved and that they want to wait until such problems are cleared up.

All five major banks ― KB Kookmin, Shinhan, Hana, Woori and NH NongHyup ― said they do not have plans to use ChatGPT immediately in interacting with clients, mainly due to unwanted exposure of sensitive and confidential information via conversation.

“The risk of using ChatGPT is higher than the benefits we can get in terms of client services,” a bank public relations staff member said on condition of anonymity.

A researcher at Hana Institute of Finance, Kim Ji-hoon assessed the banks’ ChatGPT-related security concerns stem from the fact that ChatGPT is designed to serve the public in general and falls short of keeping sensitive information from circulating outside a company.

“We don’t want that from happening, and that’s why the banks are maintaining a wait-and-see stance concerning ChatGPT,” he said.

Kim explained the lenders are believed to in touch with Naver and Kakao, two internet giants that are pushing to develop their respective version of ChatGPT, to develop tailor-made and encrypted conversational AI for their clients.

Image by: The Korea Times

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