Abstract
Purpose: This paper explores the recent literature on Generative AI applications in the financial industry and delineates its role in the future. Methodology: Our paper follows secondary research analyzing current literature on Generative AI in finance. It is one of the essential tools for understanding background information, identifying research problems, and filling the literature gaps. This paper studies how Generative AI has potential financial benefits and risks, providing unique insights into the financial landscape in the coming years. Findings: The findings unveil that Generative AI can become a strategic tool to redefine financial services and operational effectiveness. It can substantially improve the services by reducing costs, bringing efficiency, and enhancing corporate performance. It has the enormous transformative power to revolutionize client product and service offerings, improving risk management assessments and bringing efficiency to operations. However, our study indicates that the financial service industry can get into practices and decisions that are potentially unethical and financial exclusion due to an embedded bias in its algorithm and design of Generative AI technologies. Since Generative AI continues to evolve, its role and effectiveness in decision-making are expected to shape the financial services landscape significantly. Unique Contribution to Theory, Practice, and Policy: Generative AI can be a game changer for the financial industry, fueling digital transformation across industries. The transformative potential of generative AI can optimize operations, revolutionize customer experiences, and drive innovation seamlessly in finance. Our paper suggests how policymakers can foresee the challenges ahead due to the Generative AI in finance services, which is challenging the existing regulatory landscape. To stay ahead in the competition, financial firms must balance data privacy and algorithmic bias and ensure the responsible use of AI.
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