Generative AI Solutions to Empower Financial Firms

The advent of generative AI (GenAI) has caused consternation across the industrial landscape. The financial industry is no exception. The scramble to find GenAI solutions in the financial industry has led to a proliferation in the academic and practitioner literature on the subject. However, the field of knowledge remains scattered. The authors offer four deliverables. First, using a survey of the literature and interviews of managers in financial firms, they create a funnel-shaped, two-stage framework of how GenAI can empower financial businesses. The top stage comprises seven GenAI value propositions for financial firms, condensed into the EMPOWER acronym. The bottom stage includes three functions for each proposition. Second, the authors propose ten novel GenAI-based applications spanning the five verticals of financial services, thus extending the current industrial focus of GenAI applications. Third, they outline the benefits and risks of these GenAI applications, visualizing them in a benefit–risk matrix to assist financial managers in prioritizing these applications. Fourth, they propose research questions to guide academic research and policy making at the intersection of GenAI and finance.