money How generative AI is benefiting financial services
As the popularity of generative AI increases, its presence in finance is expanding to real-life applications. In an interview with Yahoo Finance Live, Daniel Wolfe, American Banker content director for credit unions and payments, discusses how generative AI continues to be integrated into the financial space.
Wolfe explains that in finance, AI has already been invested in to help with areas like fraud detection, customer service, programming and more. He states that generative AI is "well-suited" for these tasks because "you need speed and you need scale" that humans alone aren't able to provide.
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Video Transcript
AKIKO FUJITA: Our next guest is doing a deeper dive into how generative AI upended payment companies, credit unions, and financial services jobs. Let's bring in Daniel Wolfe, content director for credit unions and payments at American Banker. Good to talk to you today.
This is a very thorough report that you've put out, really looking at all aspects of disruption in the space. Why don't we start with the cards, you know, though because you, sort of, laid out Visa, as well as Mastercard, even within that space? Interesting to see how broad the disruption is likely to be.
DANIEL WOLFE: Oh, absolutely. And these are companies that over the past many years have tried to reinvent themselves not as just networks that money moves over, but as technology partners for the banks and merchants that they work with. So it's no surprise that they're investing hundreds of millions of dollars into artificial intelligence and finding use cases that are of immense use to all of these audiences. Fraud detection, customer service, programming, all sorts of things that they are investing in now and plan to continuously roll out in the year ahead.
AKIKO FUJITA: Customer service, something that we have seen, sort of, that first use case for in gen AI. But as you talk about fraud detection, I mean, what, kind of, integration are we talking about and to what extent is that likely to help with costs for these companies that I imagine have spent, but also lost a lot on fraud?
DANIEL WOLFE: So this dovetails with another trend we're covering, which is faster and real-time payments. Over the summer, Fed Now, the Federal Reserve's real-time payment network launched and that provides a second option along with something called the RTP network for banks and credit unions to enable real-time payments. Now, with real-time payments comes real-time fraud or the risk thereof. And that's the sort of thing that generative AI is very well suited for because generative AI is good at attacking problems where you need speed and you need scale that a human being may not be able to provide.
So looking at a large amount of transactions, seeing the patterns in them, and being able to stop them in an instant if they think they are indicative of a fraud is a big deal for any company that wants to adopt real-time payments. And there are benefits to this as well, it's not all risk.
They want to be able to allow people to pay their bills. They want merchants to be able to pay their invoices, to get funding from loans, government benefit disbursements as well. There's a lot of upside and a lot of appeal to this, but only if it's able to control the fraud as well. And so payment companies are laser focused on this problem and see generative AI as a tool to help them tackle it.
