December 2023Financial Services PracticeCapturing the full value of generative AI in bankingSetting up generative AI pilots is easy; scaling them to capture material value is hard. A recipe for success is emerging.This article is a collaborative effort by Vishnu Kamalnath, Larry Lerner, Jared Moon, Gökhan Sari, Vik Sohoni, and Shuo Zhang, representing views from McKinsey’s Financial Services Practice.Generative AI (gen AI) burst onto the scene in early 2023 and is showing clearly positive results—and raising new potential risks—for organizations worldwide. Banking leaders appear to be on board, even with the possible complications. Twothirds of senior digital and analytics leaders attending a recent McKinsey forum on gen AI1 said they believed that the technology will fundamentally change the way they do business. The pressing questions for banking institutions are how and where to use gen AI most effectively, and how to ensure the applications are fully adopted and scaled within their organizations.1 McKinsey Banking & Securities Gen AI Forum, September 27, 2023; more than 30 executives attended.2 “The economic potential of generative AI: The next productivity frontier,” McKinsey, June 14, 2023.3 There are additional benefits to customer experience and other areas, but the projection does not include them.The McKinsey Global Institute estimates that among industries globally, gen AI could add the equivalent of $2.6 trillion to $4.4 trillion annually in value across the 63 use cases it analyzed.2 Among industry sectors, banking is expected to have one of the largest opportunities: an annual potential of $200 billion to $340 billion (equivalent to 9 to 15 percent of operating profits), largely from increased productivity (exhibit).3 The economic impact will likely benefit all banking segments and functions, with the greatest absolute gains in the corporate and retail sectors ($56 billion and $54 billion, respectively; see sidebar “How ExhibitCapital markets andinvestment bankingAsset managementCorporate bankingWealth managementRetail bankingRisk and legalIT and fnanceTalent and organizationSoftware engineeringTraditional AI and analyticsGenerative AI Advanced AI0295932130645481018385100200300400500Web 2023scaling-benefts-of-generative-ai-in-bankingExhibit 1 of 1Value created by AI at stake by segment and function,1 $ billion1Assumes 0% overlap of traditional AI and generative AI (generative AI assumes the lower end of value at stake), top-down estimation based on projected growth and value pools.Source: The economic potential of generative AI: The next productivity frontier, McKinsey Global Institute, June 2023; QuantumBlack, AI by McKinsey traditional advanced analytics and AI analysisGenerative AI has the potential to deliver signifcant new value to banks— between $200 billion and $340 billion.McKinsey & Company2Capturing the full value of generative AI in ...
