Unlocking Potential AI Use Cases in the Funds Industry

The Irish Funds FinTech Specialist Group highlights the significant opportunities offered by both GenAI and more traditional machine learning models and the wide range of use cases whereby the new technology can be leveraged to summarize complex documentation, boost employee efficiency, create initial drafts of compliance documentation and assist in the creation of new product offerings.

Over 30 years ago, The Cranberries released their debut album, ‘Everyone Else Is Doing It, So Why Can’t We?’ to international success, topping the charts in both Ireland and the UK, and reaching no.18 in the US Billboard charts.  Following the release of ChatGPT on November 30th, 2022, and the Cambrian explosion of applications and ideas that could leverage this technology, ‘Everyone Else is Doing It, So Why Can’t We?’ found new resonance across organisations and boardrooms.  Where can we apply Generative AI and more traditional, Machine Learning in our organisations became a familiar refrain.  In this article, we will examine use cases for this technology across various organisations within the Irish Funds ecosystem.

Compliance and Offering Documentation

From a compliance perspective, one of ChatGPT's most promising use cases is the preparation of a "first draft" of both policies and offering documentation. With focused prompts and context, as well as potentially using existing libraries of documentation to train a model, generative AI can produce a workable draft of compliance documents such as AML or data protection policies in seconds.

In the same vein, the preparation of offering documents is also within the capabilities of GenAI. A manager can draw on previous prospectuses and ask GenAI to produce an initial draft of a prospectus for a new fund based on the precedents.  While the efficiency gains are clear, the output will depend significantly on the quality of the prompt entered by the user. It's also very clear from road-tests that the output of GenAI will only be a first draft – any newly created document will require subsequent review and revisions to ensure that it meets both functional and legal requirements.  

Document Summarisation

In today’s fast-paced professional landscape, time is a precious commodity. Document summarisation is one example where GenAI can transform how the funds industry works. 

With a myriad of documents from regulatory, financial, operational, investor protection and marketing, GenAI can bring huge benefits to the industry but those benefits must be delivered in a safe and secure way.   

GenAI offers a revolutionary solution by automating document summarisation, condensing complex content into concise summaries in bullet points or highly visual slide decks. Professionals can now focus on key areas by swiftly extracting essential points without wading through pages of text. While GenAI accelerates information summarisation, accuracy and reliability remain paramount.

Bond Trading Assistance

BondGPT, a GenAI application developed by Broadridge, is an OpenAI GPT-4 powered technology used by asset managers and dealers to inform their corporate bond trading. The tool integrates a chat function with real-time liquidity information, analytical models and reference data. This allows users to ask a wide range of questions, from the identification of bonds based on specific criteria to global macro indicators, for use in the bond selection process.

Additionally, the tool incorporates “Explainable AI” by implementing a “Show your work” function that displays every step taken to generate a response, such as database searches or calculations. BondGPT also enhances its response validation process by utilising an “adversarial compliance AI agent” to check every response against a set of rules before providing them to users.

BondGPT+, the enterprise versions of BondGPT, can securely incorporate a company’s proprietary data, such as restriction lists or analyst recommendations, into its decision-making process once trained.

Regulatory Summarisation & Employee Assistance

Former CTO for Citigroup Stuart Riley, highlighted in a recent article the innovative ways that Citi are applying Generative AI within the organization, with the expressed objective of making staff more efficient.  Riley highlights how the technology assists the bank’s risk and compliance team.  They used the technology to assess the impact of the new regulations, which will determine how much capital Citi has maintain to protect against future losses. Generative AI organized the proposal into pieces and composed key takeaways, which internal subject matter experts were able to leverage their knowledge to organize the regulations into pieces and composed key takeaways to work on.  A further use case within Citi, which Riley discusses, is the use of Generative AI tools to support software developers.  Riley states that ‘“The AI tool is given to the developer to enable them to produce code more quickly - it’s not replacing them. We are using AI to amplify the power of our employees.”

Conclusion

The Funds Industry and Fintech space are well placed to take advantage of the significant opportunities offered by both GenAI and more traditional machine learning models. As referenced in this article, a wide range of use cases have emerged whereby the new technology can be leveraged to summarize complex documentation, boost employee efficiency, create initial drafts of compliance documentation and assist in the creation of new product offerings. The explosion of AI based technologies creates both an opportunity and potential pressure for organizations to adapt this technology to their defined use cases. While organizations need to be mindful of ensuring AI based technologies are implemented to suitable use cases with appropriate controls the question remains “Everyone Else Is Doing It, So Why Can’t We”.