AI accelerating innovation for fintechs and financial industry

Generative AI is a rapidly developing field with great potential for many industries. Use cases are promising but will GenAI’s potential truly materialise?


BNP Paribas’ Markets 360 analysts believe that the potential of GenAI is not only real – given the tangible benefits of applications already in use today or planned for launch – but also that its impact on the economy will be most likely felt by the end of the decade.

Artificial intelligence promises to introduce a new way of delivering financial services, while bringing substantial value to the financial industry by streamlining processes, leading to enhanced efficiency and cost effectiveness. In 2024, financial institutions are expected to continue exploring ways to integrate GenAI technology in order to assess the impact on the business and operations, as well as its risk.

AI boosted by GenAI is driving innovation across the entire fintech ecosystem

GenAI in fintechs is introducing a new era of automation and personalisation, as illustrated by equity funding in GenAI startups reaching US$14.1 billion in Q2 2023, according to CB Research.

French GenAI startup Mistral AI raised €385 million in its latest funding round just before the end of 2023, with the participation of BNP Paribas. This startup has a transparent, open-weights model approach, allowing customers to easily customise their models and also self-deploy them on their own premises, without any customer data leaving the premises.

Striking the right balance between innovation and risk mitigation will be the key to unlocking the full potential of GenAI in reshaping the future of fintech.

These risks include those inherent to the technology – data privacy and embedded bias – as well as data leakage, a lack of transparency and accuracy of GenAI-created content, outdated response from query, legal risk with model licensing management, and new cybersecurity threats.

However, GenAI still requires human guidance to provide value and accelerate adoption of its applications across the financial industry.

Regtech is one of the notable examples of areas expected to be accelerated by AI and GenAI

Adopting GenAI has the potential to lead to more accurate risk assessments and help uncover hidden risks. This technology can support compliance officers in their day-to-day tasks as a result of its ability to process very large and diverse data sets and generate content in accessible formats.

Decision intelligence technology provider Quantexa is using the latest advancements in big data and AI for data management, customer intelligence, KYC, risk, fraud, and financial crime. It has recently demoed its new GenAI technology that will streamline and enhance analyst-led investigations called ‘Q Assist’. Q Assist will be able to summarise an investigation contributing to the production of Suspicious Activity Reports (SAR)1 for an investigation, generating significant efficiency gains.

AI is shaping the future of intelligent embedded finance and GenAI is expected to accelerate this

Embedded finance looks set to be one of the biggest trends in financial services over the coming years. A study by Juniper Research shows a surge in B2B embedded finance demand and confirms that B2B executives are embracing embedded finance solutions as part of their strategies.

One such example is embedded treasury, a subset of B2B embedded finance that deals specifically with the integration of treasury management tools and services into a company’s existing systems and processes. It provides treasuries with AI-powered forecasting and advanced scenario planning capabilities.

Kyriba is a prime example of this evolving trend: the company integrates AI into treasury management for automated cash management and forecasting. BNP Paribas has collaborated with the company to launch its plug-and-play treasury-as-a-service solution  ‘Easy Treasury’ for large corporates involved in M&A.

AI technology is having a transformative impact on ESG data management

In 2024, new laws will be introduced to make reporting of scope 3 emissions mandatory i.e. all indirect emissions that occur across a company’s entire value chain. To address these challenges, intelligent ESG data management platforms are needed.

Greentech Plan A has developed an SaaS-based sustainability platform to empower businesses to decarbonise their operations and value chains and respond to the regulatory shift. The platform maps emissions data across all three scopes to provide granular emissions profiles and ESG insights in dynamic dashboard overviews. Based on the indicators with the most significant reduction potential, the software empowers companies to set science-based net-zero targets and achieve them through 1,000+ decarbonisation solutions, best practices, and a network of service providers and sustainability professionals. This startup raised in total US$42 million from investors including BNP Paribas’ Opera Tech Ventures.

Kayrros is an AI-powered fintech company that harnesses satellite data from ESA and NASA to measure and attribute greenhouse gas emissions while assessing and monitoring physical climate risks. Additionally, it offers valuable investment information aimed at expediting the transition to new energy systems. In 2022, Opera Tech Ventures joined an investment round that amounted to over €40 million in support of this startup.

TextReveal is an AI platform developed by SESAMm that can monitor ESG controversies and SDG positive impact events. It leverages this information to provide datasets and NLP capabilities to generate analytics for use cases such as controversy detection, ESG and SDG sentiment scores, private equity due diligence and supplier monitoring. Opera Tech Ventures co-led a €35 million Series B in this startup.

Looking ahead at Fintech’s future

As GenAI technology continues to mature and becomes more affordable, we can expect to see more fintechs incorporating GenAI capabilities into their products over the coming year, leading to new solutions and more personalised services for businesses and clients.

  1. Suspicious Activity Reports (SARs) alert law enforcement to potential instances of money laundering or terrorist financing.