Since its introduction in November 2022, OpenAI’s ChatGPT has gained explosive popularity among users worldwide exploring its versatile capabilities and high-performance. With the potential to be integrated into various applications, ChatGPT's impact on the finance industry is a topic of interest. Some experts have raised concerns that ChatGPT may have negative implications for education and job markets, but in this article, we will focus on the potential benefits and limitations of ChatGPT in the field of FinTech and financial services.
This newsletter will explore various topics related to the impact of ChatGPT on FinTech and financial services. The following topics will be covered:
The future of customer service with ChatGPT and Large Language Models (“LLMs”)
How ChatGPT can revolutionize financial analysis for investors
Using ChatGPT to improve AML compliance in banks
Generative AI coming to the spotlight of venture capital
By exploring these topics, we aim to provide insights into the ways ChatGPT is transforming the financial services and what this means for investors, financial institutions, and FinTech companies. We hope that this newsletter will provide valuable information looking into potential implications of ChatGPT on financial services.
This article is also available on LinkedIn.
The Future of Customer Service with ChatGPT and LLMs
In the last few months, ChatGPT has been making waves in the world of AI customer service. As a result, the industry has been witnessing an influx of interest in applying AI to customer service. With the emergence of ChatGPT, leaders who were previously skeptical about the technology are now re-evaluating their stance and asking questions about its practical uses and limitations.
ChatGPT is built on one of the most powerful Large Language Models (“LLMs”) ever created, called GPT-3.5. LLMs are computer programs that can read, understand, summarize, translate, and predict written language. AI has been used in customer service for years, but ChatGPT has taken it up a notch. ChatGPT can understand texts and generate human-like responses at an unparalleled level. Surprisingly, this advanced technology has an easy-to-use user interface for everyone to unleash the power of ChatGPT, making it immensely popular.
The emergence of ChatGPT has opened up new opportunities for businesses to explore the possibilities of LLMs and how they can radically improve customer service. It is widely anticipated that ChatGPT and other generative AI tools will have an immediate impact on customer service in the following ways:
Identifying repetitive questions
LLMs can help support teams train chatbots more efficiently by identifying similarities or differences in the meanings between several pieces of text. This enables support teams to pinpoint customer exchanges that are easiest to automate — repetitive questions. By generating potential automations on their own, LLM-based chatbots eliminate the need for time-consuming manual training, allowing businesses to see meaningful automation and higher deflection rates* without delay.
Deflection rate: This is a term used in support automation. It measures the percentage of customer support requests that are handled by self-help tools instead of a human agent. The higher the deflection rate, the more requests are resolved without the need for human intervention.
Configuring answers with pre-existing data
Once an LLM has access to the appropriate pre-existing data, like a company's knowledge base or frequently asked questions (“FAQs”), a chatbot can instantly pull from that information to automatically provide answers to incoming questions. And these models don't just store info, they understand it. Customers asking identical questions receive correct, unique responses, without any human intervention.
Collecting actionable customer feedback
Generative AI collects feedback and automatically analyzes it, delivering overall sentiment and the top customer pain points right to your inbox. It takes a proactive approach by proposing automations to FAQs and concerns, giving customer service agents unprecedented access to the voice of their customers.
Creating natural conversations
Automation tools based on natural language processing (“NLP”) are much more effective at producing text with a human-like feel. These solutions don't reply with short, robotic answers or force you to choose from a bubble tree of options. Instead, they engage in conversations that closely resemble interactions with human agents.
LLMs or language models have the potential to enhance customer service. However, it is important to acknowledge the limitations of ChatGPT, which should be taken into consideration. One such limitation is the inability to regulate its responses. Therefore, it becomes imperative for businesses to adapt the model to ensure that it provides reliable and precise information that aligns with their brand.
How ChatGPT Can Revolutionize Financial Analysis for Investors
As a state-of-the-art language model, ChatGPT has the potential to transform the way investors approach financial analysis. By leveraging natural language processing, this cutting-edge technology can facilitate a range of tasks that can enhance investment decision-making and improve overall efficiency.
Gathering and organising data with ChatGPT
Let’s have a look at a simple example. Investors and research analysts frequently need to compare different companies or products, which can be a time-consuming task of gathering and organizing data from various sources. Fortunately, with the emergence of generative AI, ChatGPT can now generate comparison tables in just a matter of seconds, making the process more efficient and less labor-intensive. This is just one example of ChatGPT's remarkable capability in handling and organizing large amounts of siloed data from the web. Although the results will require further fact-checking, the platform's two sample comparison tables below illustrate its astounding potential to handle vast amounts of data for financial professionals. ChatGPT also provides the flexibility to add or remove columns and rows based on users' specific requirements.
ChatGPT's robust multi-lingual capabilities are exemplified in its comparison table of electric vehicles manufactured by Tesla and BYD. The platform's ability to accurately convey information in multiple languages underscores its value as a tool for global businesses operating in multilingual environments.
News summarization using ChatGPT
In addition, it is anticipated that new applications will emerge to leverage ChatGPT's advanced natural language processing capabilities for news summarization and sentiment analysis.
With news summarization, busy executives who don't have time to read every news article in detail can utilize ChatGPT to generate a brief summary of key points. ChatGPT allows them to input the news article and receive a summarized version in just a few seconds, allowing them to stay informed without sacrificing valuable time.
Sentiment analysis using ChatGPT
When it comes to sentiment analysis, ChatGPT can evaluate the language used in social media posts or product reviews. For example, companies could use ChatGPT to analyze customer feedback on their product and identify whether the sentiment is positive, negative, or neutral. This would enable them to understand customer sentiment at a large scale and make data-driven decisions to improve their product or service. Sentiment analysis can also be designed to assess the overall sentiment towards a particular stock or market. This can provide investors with a more comprehensive view of the market, enabling them to make well-informed decisions.
Content generation using ChatGPT
ChatGPT's core capability is content generation, which is widely recognized as a valuable feature of the platform. It assists research analysts in generating essential financial reports, earnings call summaries, and other documents. With ChatGPT, the process can be automated, saving investors valuable time and resources. The platform's ability to produce high-quality content also improves the accuracy and reliability of research reports.
Using ChatGPT to Improve AML Compliance in Banks
In the financial industry, maintaining compliance with Anti-Money Laundering (“AML”) rules and regulations is a complex challenge faced by banks due to the massive amount of data that needs to be processed and the speed at which it needs to be done. To overcome this challenge, banks require scalable and adaptable technology solutions.
Some tech startups are integrating ChatGPT or GPT-3.5 with their software to enhance AML and Know Your Customer (“KYC”) capabilities. This integration enables automation of compliance processes such as onboarding and identity verification, screening and monitoring, and transaction monitoring, replacing manual investigative work with AI. Deploying the right technology as early as possible in the bank can help identify risks with greater speed and accuracy, and optimize alert thresholds.
As an advanced natural language processing AI, ChatGPT can assist banks in the compliance process by analyzing vast amounts of data and providing insights to make more informed decisions faster. ChatGPT can help identify patterns and monitor customer transactions for suspicious activity. By automating the compliance process, ChatGPT can reduce the time and resources required for manual investigative work, enabling banks to focus on more critical tasks. This can help banks reduce their exposure to risk and prevent them from incurring costly fines for non-compliance.
Generative AI Coming to the Spotlight of Venture Capital
Generative AI involves using machine learning models to generate new data, such as images, music, or text, that are similar to existing data. The models are trained on large datasets and learn the underlying patterns and structure of the data to create new content. The goal of generative AI is to create realistic and unique data that can be used in a variety of applications such as content creation, image processing, and data augmentation. This technology has the potential to be used in a wide range of industries and applications, including art, entertainment, design, healthcare and financial services.
The technology of generative AI is becoming increasingly popular in the tech industry, largely due to the unprecedented success of ChatGPT, which is capable of generating human-like text responses. Other popular generative AI tools include Stable Diffusion and Amper Music are also gaining attention, which can create original images and music respectively.
Generative AI startups defy venture capital trends - raising billions despite a tough year
Venture capital firms are taking note, as startups building generative AI tools raised huge sums in 2022, a year of overall bad performance for venture capital investments. This success has led to high valuations and increased excitement from venture capitalists about investing in the space.
Generative AI firms, including OpenAI, the maker of ChatGPT, experienced massive increase in valuations in 2022, despite a difficult year for venture capital investments. While venture capitals are eager to invest in the space, they remain cautious after 2022 with all its challenges.
ChatGPT sparks excitement in Generative AI investment - transforming lives today!
The success of ChatGPT has only added to the excitement about investing in generative AI and machine learning. Investors are optimistic that every new release of ChatGPT will provide even better functionalities, new use cases will be identified and as a result, the AI will be able to transform our lives, not sometime in the next 10 years or 20 years, but today! Clearly this leap in the technology has led to increased anticipation and investment in the space.
Erin Price-Wright, a partner at Index Ventures, sees generative AI evolving into an essential technology used by nearly every modern business. Similar to the cloud and software sectors, the technology could become a fundamental aspect of modern business operations.
Despite challenges, the promise of faster advancements and increased value for customers
Despite 2022's challenges, investing in generative AI remains an exciting prospect for VCs. The promise of faster advancements and increased value for customers has investors eager to invest in this space. This is in sharp contrast to many other Tech sectors, where VC investments overall continue to decline.
The story for generative AI is so simple and so different from many other technologies - as generative AI evolves, it could become an essential technology for businesses and many things we do on a day-to-day basis. For VC companies it becomes a valuable investment opportunity, clearly risky, but with potentially very attractive returns.
This article outlines several potential applications and use cases for FinTech and financial services, which are powered by ChatGPT and potentially other generative AI tools. We are confident that with time, more innovative and intriguing applications will emerge.
How would you like to unleash the power of ChatGPT and other generative AI tools to supercharge financial services? Share your ideas on how we can make finance more innovative and efficient with AI!
QIDS Venture Partners is dedicated to supporting and catalysing the developments in FinTech by sharing with our audience FinTech trends and interesting FinTech business ideas. You may forward this article to other investors who are interested in FinTech as well. If you need more information or would like to arrange a meeting with us, please feel free to contact our Managing Partner Edward Shen via LinkedIn or email.
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