OpenAI’s ChatGPT will make trading more accessible to investors and advance digital transformation in banks. So rather than fear it, financial services providers should embrace it.
Broader challenges:
- Ethics: The ethical AI field seeks to bring awareness to those developing the models to avoid the spread of any misinformation.
- Privacy: The personal risk to users is the misuse or abuse of personal or sensitive information.
- Legislation: Globally, legislation such as South Africa’s POPIA, is struggling to keep up with the rapid pace of development in AI.
- Bias: A major risk at a societal level are the biases or stereotypes contained within the data that the models train on, which further perpetuates those biases in the model output and potentially leads to discriminatory results.
This is according to Heloise Greeff, a Popular Investor on eToro, an Israeli-based social trading and multi-asset investment company that provides financial and copy trading services.
Speaking to ITWeb Greeff said, “ChatGPT is an AI tool that has become popular in trading and investment circles. This algorithm uses advanced data analytics that allows investors to make more informed decisions about where and how to invest their money. The system allows for any trader to have access to sophisticated data analysis, and so ChatGPT will in effect democratise the world of investing, since a sophisticated decision support tool of this kind has never been so easily accessible to the retail investor. Through access to this sort of information, an investor could be able to anticipate changes in the market and so make more informed decisions about when to sell or to buy.”
Service disruption
Greeff says there is concern about the future of investment banks because technology like ChatGPT has the potential to disrupt some of the services these banks offer.
However, she believes that ChatGPT could actually enhance the role that banks play if they adopt the technology to provide users with better data, to automate processes, and thereby focus on more value-added activities.
“This is a phenomenal AI tool and, rather than being frightened of it, everyone in the financial sector should learn about it and see how they can use it in their own work,” says Greeff.
What of the impact on Africa?
Greeff says “The level of global interest in ChatGPT has resulted in many use cases being displayed online, including in Africa. “Like in many other regions, there are pockets of early adopters eager to investigate and, hopefully, take advantage of the potential applications. Africa’s main sectors for AI investment are healthcare, agriculture, and financial services.”
This is a phenomenal AI tool, and rather than being frightened of it, everyone in the financial sector should learn about it and see how they can use it in their own work.
eToro Popular Investor Heloise Greeff.
Another aspect of ChatGPT’s disruption is that it is forcing a response from traditional brick and mortar banks. No matter how far they have advanced with digital transformation and added to their solutions, it is unlikely that they are as far ahead as ChatGPT.
“Over the past decade, many traditional African banks have led the way in the global arena with mobile money platforms, particularly in countries with a high unbanked population. However, the next generation of challenger banks, existing entirely online with no physical presence, will need to be nimble to keep up with the fast pace of development in the AI field. In Europe, challengers like Revolut and Monzo, are already proving strong competitors for traditional brick-and-mortar banks. Their digital footprint and rich user data place the customer at the core of the business again,” Greeff explains.
Pros and Cons using ChatGPT in finance:
Pros:
- Tool can generate human-like responses which makes it more accessible to a broader user base.
- With more people testing and applying the algorithms, it can learn and improve much faster.
- Opportunity to discover new applications and use cases.
- Cost savings – automates routine tasks.
- Personalisation – uses advanced natural language processing to understand preferences of customers.
- Round the clock availability and access.
Cons:
- Limited problem solving ability.
- Does not produce insights.
- Risk of errors – machine can make mistakes or provide incorrect information.
Banks will have to invest in AI technology to keep up with customer demand. The timeframe for integration will depend on the specific bank’s current level of AI infrastructure and talent, internal regulatory structures, and customer perception.
“Banks can no longer avoid the potential benefits of incorporating technologies like ChatGPT, including improved customer service experience, increased efficiency, and cost savings. Building a strong team of AI experts and data scientists who can help to implement these technologies into their operations should be a key priority to ensure banks keep up with competitors,” she adds.
From an investor point of view, the value proposition is also clear says Greeff, “This is a tool that will allow retail investors to analyse financial data in ways that have not been possible before. It can delve into huge volumes of data, and that provides us with far more information about companies and shares, moves in the markets, and so on. All in all, it means that an investor will have greater access to information - and access to insights that are more credible.”
Greeff says Africa has the youngest population in the world, with 60% under the age of 25, a potentially reliable source of talented future AI experts. Additionally, it only takes one person and a mobile device to participate in the AI revolution, a completely different scenario to previous revolutions that demanded large upfront capital to be able to participate.
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