Adopting AI in the world of finance

Finance


Helen Lu*

Large Language Models (LLMs) like ChatGPT are shaking up the financial world.

Morgan Stanley is testing an OpenAI-powered chatbot to assist financial advisors. The bot is trained on the bank’s own research reports and provides quick access to its extensive proprietary knowledge base.

Private equity firms and insurance companies are also early adopters, using these innovations to pre-screen investments and automate claims. As LLM steadily spreads across the financial industry, we must carefully embrace and adapt to this revolutionary change.

Substitute or Complement?

Against this backdrop, it’s natural to wonder if the financial profession is becoming obsolete. But this concern stems from the simplistic view that AI is a human replacement. Large-scale language models should not be viewed as a substitute for skilled experts, but rather as a powerful tool to enhance expert competence.

Tools like ChatGPT complement human expertise with AI-driven insights to help financial professionals make better decisions, automate mundane tasks, and stay ahead of the curve in an increasingly competitive marketplace. Helps you stay ahead.

Both Productivity Enhancer and Equalizer

In contrast to common associations between innovation and inequality, early evidence suggests that the adoption of LLM-enabled technologies has leveled the playing field in the workplace.

In a call center at a major software company, chatbots improved the productivity and quality of underperforming employees more than “superstars.”[1]

In another study, researchers conducted an experiment and found that ChatGPT significantly improved the productivity of college-educated professionals in their writing tasks, especially benefiting slow writers. rice field.[2]

Will costs go down and demand go up?

This increased productivity has the potential to reduce the cost of providing services. This increased efficiency allows financial professionals to focus on high-value activities such as customer relationship management and strategic decision-making.

Moreover, as technological innovations like LLM make financial services more affordable and accessible, newfound affordability and accessibility will increase the demand for these services and ultimately may lead to increased needs for financial professionals.

Revolutionize knowledge sharing and flatten organizational structures

The rise of interactive LLM has democratized access to knowledge. These AI models make vast information repositories accessible to people of all computer literacy levels. Additionally, the technology can be used to mine emails, recorded discussions, and other resources to facilitate seamless sharing of organizational ‘know-how’. This may reduce the need for specialization and encourage a reassessment of traditional organizational structures.

Rather than seeing such AI as a replacement for human workers, we need to recognize its potential to reduce service costs and increase demand for financial services. By making expert advice more accessible, we can create a world where more financial professionals are needed.

How should professionals prepare?

To prepare for the impact of large-scale language models, financial professionals (and other industry professionals) should focus on fostering AI literacy in their organizations. Here are the steps to consider:

1. Encourage entry-level professionals to use models like her ChatGPT and provide training to help them understand the strengths and limitations of technology.

2. With the help of your LLM, develop a strategy that transforms your organization’s “know-how” and culture into easily accessible information.

3. Anticipate early impacts on work efficiency and quality, and address frustrations among “superstars” who may not have benefited as much from technology.

Four. Rethink team organization and take advantage of reduced specialization requirements to create more versatile and adaptable structures.

Five. Reduce AI anxiety by highlighting AI’s potential to improve overall productivity and job satisfaction.

Ultimately, the integration of LLMs into the financial sector could revolutionize how professionals access and share knowledge. Embracing AI and adapting to its impact can help financial professionals position themselves in a rapidly evolving industry.

[1] Augmented Intelligence: Effects of AI on Productivity and Work Practices (2022), Research Paper, E. Brynjolfsson and L. Raymond

[2] Noi, S, & Chan, W. (2023). Experimental evidence for the impact of generative artificial intelligence on productivity. Available at SSRN 4375283.


*Helen Lu is a Senior Lecturer in Accounting and Finance at the University of Auckland Business School. Dr. Lu’s research, “Relative Evaluation with Machine Learning,” was published in his Journal of Accounting Research, March 2023.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *