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Generative AI in finance: Banking vs Fintechs

Generative AI's impending implementation across the tech stack poses a lot of questions about the spread of power in the ecosystem. Will it allow up-and-coming fintechs to establish themselves, or only further the lead of incumbent banks. At Fintech Connect Europe today, a panel featuring multiple tech executives discussed the unique benefits and problems each side faces when implementing proprietary models. 

Alexey Gabstarov, CTO of 2016 founded digibank Kroo, says fintechs are "a bit handicapped" due to a lack of "historic data." Data is king when it comes to training artificial intelligence models, and banks have historically had too much for their own good.

Phil Starett, CTO of Adobe International and former Barclays director, says "banks have always had the data but didn't really know what to do with it." They invested heavily in "building these big data farms," and while they've largely been a cost sink for some time, recent AI developments are finally allowing them to come good.

Gabstarov is hoping regulation will fix this disparity by mandating data sharing initiatives among firms. If that doesn't work, another solution will be to "use more synthetic data in training those models." This can level the playing field... or increase the risk of harmful hallucinations.

The problem for these big banks is the same problem they've been grappling with for decades; useless legacy tech. Gabstarov says Kroo's data is all on one platform, a "single pane of glass" an AI model can look at. Navigating banking stacks, conversely, would be like breaking that pane of glass into a million shards and asking the AI to walk across it barefoot.

This is likely why banks are taking such a front-footed approach on casting off as much legacy tech as they can. Deutsche Bank has been particularly officious, cutting applications in the thousands.

While both fintechs and banks stand to benefit from genAI, it's only those already actively implementing the technology that we can expect to come out on top. "This industry moves so fast," Gabstarov says. "If you're just now trying to look forward, you're already behind."

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AUTHORAlex McMurray Editor

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