Embracing GenAI: A Roadmap for NZ Financial Services Companies - Part 3

In the rapidly evolving world of technology, artificial intelligence (AI) is transforming industries by enhancing efficiency and driving innovation.

Tuesday, September 3rd 2024, 5:51AM

by Clive Fernandes

While AI governance focuses on ethical guidelines and compliance, moving towards enablement prioritises empowering employees and fostering creativity. Enablement as the next step after governance has proven successful in other sectors, such as healthcare, and holds significant potential for New Zealand's financial services industry.

Shifting AI Focus from Governance to Enablement

The Mayo Clinic is a prominent AI adopter in the US healthcare sector. Their approach of moving towards enablement allows employees to develop and test AI models applicable to their domains. A 60-person team at Mayo supports AI and data enablement, managing the data library and providing a platform for building AI applications. End users are responsible for data quality and integration, ensuring high-quality data is incorporated into AI models across the organisation.

In New Zealand, financial services companies can adopt a similar strategy to the Mayo Clinic by establishing dedicated AI teams that support data and AI initiatives.

These teams can play a crucial role in providing platforms and resources that allow financial analysts, advisers, and other professionals to build and test AI models tailored to their specific needs.

Financial institutions can drive significant advancements in the following areas by focusing on enablement rather than restrictive governance.

1. AI-Driven Investment Strategies

Investment management companies in New Zealand will embrace AI to enhance their investment strategies. By leveraging machine learning algorithms, they will analyse global economic indicators, market trends, and historical data to predict changes in asset prices. This approach will enable these companies to make data-driven investment decisions, ultimately improving portfolio performance and delivering better client returns.

2. Personalised Financial Advice

Financial institutions will integrate AI into their advisory services to offer personalised financial advice to clients. AI-powered platforms will analyse client data, such as spending habits, financial goals, and risk tolerance, to provide tailored investment recommendations. This personalised approach will enhance customer satisfaction and empower financial advisers to deliver more value to their clients.

3. Fraud Detection and Prevention

New Zealand financial services companies will implement AI solutions to enhance fraud detection and prevention. By analysing transaction data in real time, AI algorithms will identify patterns and anomalies that may indicate fraudulent activities. This proactive approach will enable companies to protect customer assets and minimise financial losses, reinforcing trust and confidence among their clients.

What are the strategic first steps to be taken?

Financial institutions must take strategic initial steps to successfully shift from a governance-focused to an enablement-driven approach to AI adoption. These steps involve setting up a framework that encourages innovation while ensuring robust data management and seamless integration of AI technologies.

1. Decentralised Data Management

Empowering end users to manage data quality and integration is critical to shifting focus from governance to enablement. By decentralising data management, financial institutions can ensure that AI models are built on robust, high-quality data. This approach encourages innovation and agility, enabling companies to respond swiftly to changes in the financial landscape.

2. Implement Scalable & Flexible AI Infrastructure

Financial institutions should invest in cloud-based platforms that provide scalable and flexible infrastructure to support AI initiatives as they grow and evolve. By leveraging APIs and microservices architectures, institutions can ensure seamless integration of AI technologies with existing systems and processes, enabling a more agile and responsive approach to AI adoption.

After setting a strong governance base, by shifting the focus from governance to enabling innovation, New Zealand's financial services industry can unlock the full potential of AI. Establishing a dedicated AI team and empowering end users can drive efficiency, accuracy, and innovation, positioning financial institutions to thrive in the rapidly evolving financial landscape. Embracing this approach will not only enhance competitiveness but also ensure that New Zealand gets to the forefront of the global financial services industry.

Clive Fernandes is a director at National Capital.

Tags: AI