You’ve seen the hype around Generative AI (GenAI). And perhaps you even have an AI strategy in place at your organization. But because the development of AI moves faster than any enabling technology we’ve seen in banking in the past, it’s important to think ahead to the next iteration. In this case, the next evolution of GenAI is Agentic AI.
Agentic AI, also known as autonomous AI, refers to AI that can make its own decisions, form a plan, act on its own, and learn from its mistakes to achieve specified goals. Agentic AI can take a complex request and break it down into simple, achievable goals to solve complex problems.
Agentic AI has numerous possibilities for use in financial services, including:
Create a highly personalized customer experience
Agentic AI can automate routine interactions, allowing firms to launch chatbots or virtual assistants that can autonomously handle customer questions, suggest financial products based on specific preferences, and even analyze customer behavior to predict their needs.
Some of this is currently possible with GenAI, but Agentic AI will be able to handle even more complex tasks and make autonomous decisions without human intervention. Agentic AI customer service bots will also be proactive, and will be able to anticipate customer needs based on real-time data and past behaviors.
Offer autonomous roboadvisory with algorithmic trading
Roboadvisors have been popular in fintech since 2015, but Agentic AI will make it possible for firms to autonomously manage investment portfolios by analyzing market trends, risk profiles, and financial goals. The new enabling technology could also become more intelligent, providing financial institutions with scalable advisory services that make investment decisions in real time without human intervention.
Agentic AI will be able to execute algorithmic trades in real time and without human intervention by autonomously making buy or sell decisions based on market conditions, financial models, and pre-set objectives. The technology will also proactively adjust portfolios based on market trends, economic forecasts, and client life changes, continuously aligning investments with a client’s long-term goals.
Power fraud detection and risk management
While GenAI can continuously monitor transactions to detect anomalies and identify fraudulent patterns, Agentic AI can instantly flag suspicious activities, alert relevant parties, and even block transactions. This offers financial institutions an effective way to reduce fraud risks and improve compliance with regulatory requirements.
Credit scoring and underwriting
Agentic AI can autonomously assess creditworthiness by analyzing vast amounts of structured and unstructured data, such as transaction histories, social media activity, and economic conditions. The enabling technology will be able to independently decide whether to approve loans or credit lines in real-time, based on pre-determined parameters such as risk tolerance and regulatory requirements.
Compliance
With Agentic AI, firms will be able to autonomously monitor, detect, and act on compliance violations in real time. The technology will be able to autonomously make decisions– such as freezing an account or flagging a transaction– and take corrective actions. Also, as regulations change, it can adjust to rules without human intervention.
Back-office automation
Back-office automation is something that banks have been leveraging for a long time now. However, Agentic AI will be able to automate back-office functions like settlement processing, reconciliation, and financial reporting without human intervention and in real-time. Additionally, because Agentic AI can handle, complex, multi-step processes, it will be able to plan, initiate, and execute a task in a proactive manner.
Real-time risk assessment
To reduce operational risks, Agentic AI can autonomously assess the organization and market in real time. Firms with large, organized datasets may experience the most benefit, as the enabling technology will be able to make the most informed decisions based on large, clean sets of data.
These capabilities may sound equal parts idyllic and dystopian. However, it is difficult to prepare for an Agentic AI-powered future without knowing what role regulation will play. It is likely that regulators in the U.S. will mimic Europe in creating some form of AI regulation, especially for its use in financial services.
No matter what the regulatory future looks like, firms can take a handful of steps to prepare for the adoption of Agentic AI. So whether or not your organization even has an AI policy in place yet, you can start working on these things:
- Create a robust data infrastructure
Because Agentic AI relies on a huge amount of data, banks need to have strong data management systems that collect, store, and process both structured and unstructured data. Simultaneously, it is important that banks adhere to strong security protocols to protect consumers’ sensitive financial data. - Upgrade IT infrastructure and cloud capabilities
Banks may need to move more of their operations to the cloud to free up computing power and storage facilities, both of which Agentic AI demands. Edge computing may be a solution to help reduce latency for AI applications, such as algorithmic trading, that require quick responses. - Build AI literacy into your culture
Firms should consider investing in their workforce by offering AI training programs. This will help employees work with AI efficiently and creatively. AI education will also help keep employee AI usage compliant by setting boundaries, maintaining transparency, and ensuring ethical use. - Create an ethics and compliance framework
Because Agentic AI has the ability to make autonomous decisions, it is essential that those decisions are based on ethical and regulatory compliant standards. Consider creating an AI ethics committee that is able to monitor and oversee AI decision-making. The committee can continuously ensure that the AI usage is not biased and will not harm customers, employees, or the organization. - Foster bank-fintech partnerships
If not doing so already, banks should consider partnering with fintechs and AI technology providers to accelerate the adoption of Agentic AI. By collaboarting with third parties, banks can benefit from AI systems that leverage a broader ecosystem of services. - Begin using a different form of AI
To prepare for the future of AI, one of the best things firms can do is to begin piloting AI in targeted, high-impact areas such as customer service or portfolio management.