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FIs Explore GenAI Potential in Small Business Lending Despite Customer Concerns

Financial institutions are embracing the integration of generative artificial intelligence into their operations, recognizing it as a vital step to remain competitive in today’s fast-evolving financial services landscape.

Industry players are transforming traditional methods of data analysis and client interaction through GenAI capabilities, which include automating complex tasks, extracting deeper insights from data, and improving communication channels with clients and stakeholders.

In December, J.P. Morgan announced that it is “pursuing” a conversational analytics assistant, aimed at enhancing the corporate treasurer experience by simplifying access to complex data — a task that it said remains daunting for many treasury departments.

The GenAI application could empower corporate treasurers to access their data in real time using straightforward language prompts, enabling them to retrieve information, create personalized reports and visualizations, and perform advanced analytics — all without requiring coding skills.

“Our clients’ needs are at the center of all of our software development efforts,” J.P. Morgan Payments Head of Analytics and Insights Tony Wimmer said in a Dec. 20 statement. “We look forward to leveraging GenAI technology to co-develop solutions with our corporate treasury clients.”

Earlier this month, Bankwell, a Connecticut-based community bank, began piloting a GenAI tool for small business lending, American Banker reported.

Using Cascading AI’s Casca software, the virtual assistant will guide small business owners through the often lengthy and complex loan application process, handling tasks typically performed by loan officers, such as data validation and loan approval.

“We’ve seen tremendous success with it, even in the first few months compared to the prior four months,” Bankwell Chief Innovation Officer Ryan Hildebrand said in the report.

Banking on GenAI in Finance

These advancements dovetail with PYMNTS Intelligence’s “Generative AI Tracker®,” which revealed an uptake of GenAI in the financial sector, particularly in meeting the growing demand for personalized customer services.

According to the study, over 80% of financial professionals said their institutions are open to embracing GenAI, while 75% of FIs said they expect similar or greater benefits from GenAI compared to predictive AI. Sixty percent of U.K. institutions said they are prepared to incorporate GenAI within their existing risk management strategies.

Despite GenAI’s potential benefits, however, most consumers are still skeptical about the risks associated with the technology. As highlighted in the report, nearly 80% of consumers expressed concerns about misinformation facilitated by GenAI, particularly the technology’s potential to disseminate inaccurate content.

Separate PYMNTS Intelligence research also found that bank and FI customers are apprehensive of GenAI in financial services, with over 70% expressing nervousness about its use in the banking sector. Only 58% stated they would be comfortable with their banks using this technology.

To address these concerns, “most customers agreed that factors such as data transparency, human oversight and government regulation would increase their comfort levels with AI deployment in financial roles,” the study noted.

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