53% of consumers trust Generative AI for financial planning
- Customers are showing willingness to purchase products recommended by Generative AI as well as trust its use for financial planning.
- Even though customer appetite seems to be strong, FIs are not rushing into Generative AI adoption, especially in consumer-facing products.
Generative AI may be the new kid on the block but it is quickly earning consumer trust in areas like investment and shopping. In part this quick consumer uptake may be emerging from how companies have reacted to the race in Generative AI. Investment solutions have been some of the first adopters of this technology in financial services, which means they are also the first to bring Gen AI capabilities to customers' doorsteps.
53% customers report trust in generative AI-assisted financial planning according to a new report by Capgemini. Younger age cohorts like Gen Z have higher trust in the technology (55%) as opposed to baby boomers and Gen X.
Similar to attitudes about financial planning, consumers are willing to purchase products recommended by Generative AI. This interest is stable across age groups.
Another consumer facing use case emerging from application of Generative AI in financial services is tax preparation. However, willingness to pay more Generative AI services for tax preparation is less in older age cohorts, with 32% of Gen Z willing to pay more for these services while only 23% of baby boomers are willing to do the same. This willingness to spend more on Generative AI assisted tax preparation services has yet to reach the halfway mark, however.
Unlike other industries financial services are considered to be “conservative by design”. This means that for the near future adoption of Generative AI in this space is going to be slow. Most likely early adoptions of the technology will be present in the back office of financial institutions rather than consumer facing products.
For example, in May, Goldman Sachs revealed that the bank is using Generative AI tools to enable its developers to automatically generate and test code. Similarly, Morgan Stanley is using the technology to help financial advisors with their queries. As such the technology serves as an augmentation of employee workflows rather than full-fledged products. In terms of consumer facing products, Public announced its co-pilot research assistant for investment, Alpha, which allows for a “conversational research approach”, said co-CEO of Public Jannick Malling in Tearsheet podcasts.
As for applications in the area of investment advice, robo-advisors are also dependent on artificial intelligence but have been in the game for quite a bit longer than Generative AI. Applications of this technology in the sector will not be about full-scale transformation but an enhancement. It is also likely that financial institutions will continue to err on the side of caution when it comes using Generative AI in consumer facing products, this is probably in part because of the lax regulatory environment around the technology but also because Generative AI can “hallucinate” data i.e. provide factually incorrect responses that sound plausible.