Transforming Financial Services: A Comprehensive Review of Generative Artificial Intelligence Applications in Banking and Finance
Keywords:
Generative AI, Banking, Financial Technology, Large Language Models, Synthetic Data, Customer Experience, Risk Management, Algorithmic Trading, Regulatory Technology.Abstract
A paradigm shift is happening in the banking and finance industry due to the use of artificial intelligence, where Generative AI (GenAI) has become a new emerging force that hasn't been considered as a transformative one yet compared to the old methods of predictive analytics. The research paper involves a thorough discussion of the GenAI use in case of the financial services ecosystem with a detailed discussion of its ability to provide new content, model scenarios, and personalized interactions. We generalize the exploration of GenAI as customer support services (CSS) suggested by Puchakayala (2024) to other areas such as risk management, algorithmic trading, fraud detection, financial reporting, and regulation. This paper is based on the synthesis of the knowledge base on deep learning, multimodal systems, and ethical AI and creates a comprehensive system of GenAI application in finance. We discuss important technologies forming the basis of GenAI including Large Language Models (LLMs), Generative Adversarial Networks (GANs), and diffusion models and how they are applied to financial services, including dynamic customer interaction and hyper-personalized creation of products to the creation of synthetic financial data to train and stress-test models. The article deals with such crucial implementation issues as the privacy of data, model hallucination, regulatory oversight, and ethical aspects of autonomous financial content creation. By comparing and contrasting and assessing the performance of GenAI over conventional rule-based systems (such as IVR and simple chatbots) in terms of flexibility, knowledge of context, and value-generating interactions, we demonstrate that GenAI outperforms them. Nevertheless, to integrate successfully, there should be strong governance structures and explainability systems as well as human-AI collaboration models. The article finds that GenAI is not just a minor upgrade, but a complete rethinking of how financial services is offered, and has the capability to streamline the offer process, make it more accessible, and more personal and offer new aspects of risk, which need to be carefully managed by responsible innovation.
