Is Luxembourg’s Financial Sector Prepared For ChatGPT?

Ananda Kautz, Head of Innovation, Digital Banking & Payments at ABBL (Photo © ITnation)

Surveys conducted by ABBL, CSSF and the national Central Bank show that supervised organizations see generative Artificial Intelligence as an opportunity rather than a threat. However, its usage remains “fairly limited and still at an early stage.”

Luxembourg’s finance industry sees benefits and opportunities in generative Artificial Intelligence (AI), the Luxembourg Bankers’ Association (ABBL) says, giving the example of ChatGPT a chatbot developed by OpenAI and released in November 2022.

According to a survey conducted by the professional association with its members, “76% of respondents are optimistic about the benefits and opportunities offered by ChatGPT, and most are allowed by their institution to use it respecting data protection guidelines”.

A new business era

42 organizations including credit institutions, fintechs, consulting companies, payment institutions, electronic money institutions, support PFSs, law firms, and software vendors took part in the survey conducted with the support of Société Générale Luxembourg.

57% of the respondents (88% among credit institutions) had planned to implement ChatGPT or other AI-powered chatbots for specific use cases, the survey shows. “This is an indication of a strong credit of trust given by banks towards the generative AI technology,” explains Andrey Martovoy Innovation & Digital Adviser at ABBL. “We expect that the adoption journey is likely to accelerate in the coming years.”.

The technology could improve customer services, including “more personalized banking experiences thanks to enhanced customer analytics, investment advice based on larger and new sources of data or customer service chatbots available 24/7,” details Ananda Kautz, Head of Innovation, Digital Banking & Payments at ABBL. “Finally, ChatGPT can support financial institutions in detecting fraud by analyzing transactional data in real-time and providing support to the Tech team. In a context of scarce Compliance and IT resources, ChatGPT could be part of the solution”.

Laurent Marochini sees its release as the beginning of a new business era. “It will impact the functioning of society through its implementation in business processes. The first movers will be rewarded with lower costs, increased speed, and greater accuracy,” explains the Chair of ABBL’s FinTech and Innovation Forum also Head of Innovation at Société Générale Securities Services Luxembourg.

“It is key to educate both employees and executives on its [ChatGPT] related opportunities and risks.”

Ananda Kautz, Head of Innovation, Digital Banking & Payments at ABBL

Inaccuracies and threats

Its implementation might however lead to inaccuracies and threats: “Language models can sometimes completely invent the answer to a question phrased by the user” warns Ananda Kautz. adding: “This phenomenon can be difficult to identify due to the persuasive arguments used”.

The only way to counter it would be to systematically check the sources on which the models base their argumentation: “This implies that one cannot completely rely on this technology for learning purposes,” Kautz adds.

Data privacy is another concerning issue. While requests are sent to companies operating generative AI, the technology cannot be used to process confidential data, especially ones protected by GDPR.

Is senior management familiar with the adoption of generative AI? 7% of senior managers of financial institutions are very familiar with ChatGPT, 53% somewhat familiar, and 40% not at all, the survey shows.

“Familiarity of senior management with ChatGPT is an important factor in the technology adoption,” Laurent Marochini notes, while Ananda Kautz adds that “it is key to educate both employees and executives on its related opportunities and risks”.

On 11 May, the European Parliament approved the AI Act, a legislation drafted by the European Commission aiming to regulate Artificial Intelligence tools according to their levels of risk (from low to unacceptable). The text provides obligations to governments and companies using these tools based on these risks.

“The AI Act sets a framework for the trustworthy usage of specific AI use-cases in many sectors including financial services,” ABBL explains.

Fairly limited, at an early stage

On 3 May, the Commission de Surveillance du Secteur Financier (CSSF), the regulator of the Luxembourg financial industry, and the Central Bank of Luxembourg released a “Thematic review on the use of Artificial Intelligence in the Luxembourg Financial sector”.

The 50-page document is based on a joint survey by both institutions between October 2021 and January 2022. The objective was to understand the level of adoption of certain innovative technologies and in particular the usage of Artificial Intelligence and Machine Learning (ML) in the Luxembourg financial sector.

Among the 148 surveyed entities, 138 responded (93%). “The survey demonstrated that the usage of AI in the Luxembourg financial sector is currently fairly limited and still at an early stage, but investments in this technology and especially ML are estimated to increase, paving the way for a wider adoption of these innovative technologies in the near future,” the document concludes.

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