Mon Dec 09 22:32:24 UTC 2024: ## Generative AI: Banking and Payments Firms Double Down Despite Uncertain ROI

**NEW YORK, NY** – Despite a drop in reported return on investment (ROI), Chief Marketing Officers (CMOs) in the banking and payments industry are significantly increasing their investment in generative AI for customer service, according to new PYMNTS Intelligence data. The report, “AI in the Chat: Generative AI’s Growing Role in Customer Service,” reveals a strategic shift: CMOs view generative AI less as a short-term profit driver and more as a foundational technology crucial for long-term innovation and competitive advantage.

The data shows a dramatic increase in CMOs finding generative AI highly effective in key areas. In July, 97% reported high effectiveness in assisting employees and customers in accessing information (up from 72% in April), while 94% cited high effectiveness in personalized email and recommendations (up from 75%). This is driving a substantial increase in planned budget allocations: 55% of CMOs plan to increase their generative AI budgets, compared to 45% in April. Conversely, the percentage reporting a positive ROI decreased from 23% to 8.3% during the same period.

Generative AI’s impact is transforming customer service workflows. Automated tools handle routine queries, freeing human agents to focus on complex issues. This approach is particularly beneficial in the payments sector where speed and accuracy are paramount. The technology also enables real-time, automated responses, often acting as a first line of defense before escalating to human representatives.

Beyond efficiency, generative AI is powering personalization. In banking and payments, this translates to tailored product offerings, such as personalized credit card recommendations based on spending habits, and proactive fraud prevention through AI-driven anomaly detection.

While the immediate financial benefits remain unclear to some, the long-term strategic value is undeniable. CMOs are leveraging generative AI for market research and gaining insights into customer preferences, leading to improved product strategies. This forward-looking approach reflects a broader industry trend towards seamless and meaningful customer experiences, positioning generative AI as a key enabler of future growth.

Despite the promising applications, challenges remain. Organizations must address ethical concerns, data privacy issues, and the need for skilled personnel to manage these complex systems. The successful implementation of generative AI in customer service requires a well-defined, long-term strategy. The future success of financial institutions hinges on their ability to leverage this technology to meet evolving customer expectations for personalized and efficient service.

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