Speaking with Delano in mid-December, Andreas Braun, director of artificial intelligence and data science at PWC, delved into the transformative potential of generative AI in Luxembourg’s financial services sector and its implications for client experiences, risk management and alleviating the staffing shortage, in this latest episode of the ‘’ series of interviews.
Kangkan Halder: In what ways do you foresee AI, particularly generative AI, enhancing the service offerings and client experiences in the financial services sector in Luxembourg?
: In terms of service offerings and client experiences, AI is considered more of an augmenting technology. We already see AI used to give insights on spending habits or suggest investments. GenAI can bring this to the next level, moving towards hyper-personalisation with offerings and an experience that is really tailored towards the individual, thus increasing client retention and satisfaction.
How can AI and generative AI technologies be leveraged to improve risk assessment and fraud detection in Luxembourg’s service provider sector?
In both areas generative AI can provide a significant improvement over the status quo. GenAI tools can be highly effective in increasing the sources used for risk-assessment and focusing the attention of the risk manager on the cases that are relevant. AI is already applied in meaningful ways in fraud detection, financial service companies are rather using anomaly detection and pattern recognition algorithms for this purpose--GenAI could however help your IT department in writing more secure software.
What role do you think AI will play in shaping the regulatory and compliance landscape for financial service providers in Luxembourg over the next one to two years?
Regulation around AI is an emerging and increasingly relevant topic, with the EU AI Act likely to be finalised in late 2023. This law will impact any financial service provider, as AI systems taking decisions on customers, e.g., those that determine your creditworthiness will be regulated. The [Luxembourg Financial Sector Supervisory Commission] CSSF has been quite proactive on the topic of AI, supporting studies and whitepapers in this regard. It will however be interesting to see their position on the use of AI in the cloud--which is where the most powerful AI models are available.
If AI is used well, it can help all workers to perform their work more efficient.
What potential do you foresee for generative AI in revolutionising financial forecasting and investment strategies for service providers in Luxembourg?
Forecasting is a domain where different AI technologies reign, not necessarily GenAI. Google’s weather forecasting AI GraphCast is using another technique called graph neural networks and beats the most complex traditional weather simulation models, at a fraction of the computational cost. While they are not yet on the market, it is feasible that such AI systems will also beat classical modelling techniques on financial forecasting. In terms of investment strategies, GenAI will allow to consider a more complex set of opportunities, considering the vast amount of data it has been trained with. This could be coupled with simulating AI systems, to create the best possible strategies. It might however take a couple of years before we see that in practice.
How do you envision the integration of AI in the service provider sector impacting employment and skill requirements in Luxembourg’s financial industry?
The Luxembourg financial industry has been experiencing a shortage of qualified workers in the past years. If AI is used well, it can help all workers to perform their work more efficient. Ideally this freed up time is used for those tasks that really add value to the company, such as interacting with important clients and solving relevant challenges. Of course, employees will need to be trained on the AI tools that they are using and ideally on how to make the most of GenAI systems. Not everyone needs to be a prompting specialist, but knowing the basics is increasingly useful. In the future of Luxembourg’s financial industry, AI is not only for data scientists--but it will also become a day-to-day tool that brings benefits to all employees.