What is ChatGPT?
ChatGPT is an AI (artificial intelligence) model that can answer questions, analyse data, and provide personalised ideas—from recommending exercise routines to helping you plan an on-a-budget trip to Madagascar. It can give you feedback on your writing, help with the kids with their maths homework, and provide tech support – among about a million other things.
Created from a previous model, InstructGPT, ChatGPT was trained through a process called “Reinforcement Learning from Human Feedback” (RPHF), which basically means it reviewed sequences of human dialogue and then tried to emulate those types of interactions.
After several iterations, ChatGPT is now available to use for free at chat.openai.com (you can also get ChatGPT Plus for a small fee). Research is ongoing, and its developers are still fine-tuning ChatGPT, but it’s already being used in some exciting ways, both in and out of the finance field.
What ChatGPT can do
Here’s a closer look at some of the things ChatGPT can do that relate to finance.
Data analytics
One of ChatGPT’s most popular uses is as a data analyzer. It can analyse large, overwhelming amounts of data and find patterns that might escape human data analysts. For example, it might be able to find a correlation between two points of seemingly unrelated data. It can also analyse customer data to identify things like spending habits and risk tolerance.
Automation
AI models like ChatGPT are capable of automating repetitive tasks like data entry and report generation. For example, it could create a claim report based on photos or help with underwriting for a life insurance policy. With its ability to comprehend and remember data, it reduces the risk of human error while keeping all the information as accurate as possible.
Natural language processing
Because its training involved analysing and copying human dialogue, ChatGPT has natural language processing skills, or the ability to understand human language and respond in kind. As such, many businesses use it as a customer service chatbot to help answer FAQs on their website or app.
How it’s being used in the world of finance
Now that you know a bit more about ChatGPT and its abilities, let’s look at some of the top ways it’s currently being used in the finance sector.
To inform investment decisions
ChatGPT can analyse large amounts of data in real time, which makes it an intriguing tool for investing. Among other things, it can:
- Assess a client’s spending habits and risk tolerance
- Identify potential investment opportunities
- Provide research summaries
To streamline underwriting and claims
In insurance, ChatGPT’s power as a data analyzer comes in handy once again. With its ability to analyse someone’s financial data, medical history, and other lifestyle factors, it’s the perfect tool for underwriting. Based on a client’s history, needs, and goals, it can suggest individualised coverage and pricing.
ChatGPT can also help speed up the insurance claims process. Based on photos, videos, and text descriptions, it can quickly analyse the damage and suggest a payout amount.
To prevent fraud
In banking, ChatGPT can monitor accounts and flag suspicious activity, such as large transactions or high-risk transfers. With its large processing capacity, it can also analyse various points of a bank’s operations to identify potential risks and weak spots.
Many organisations are considering using ChatGPT to perform compliance checks and creating regulatory reports, which means it might be easier than ever for banks and other financial institutions to follow all government laws and regulations.
To help customers
Many banks have already started using ChatGPT for customer service purposes. Virtual assistants and chatbots can help someone check their account balance, view their transaction history, and find things like interest rates and credit statements.
The future of ChatGPT and finance
Already, ChatGPT and other AI models are shaking up the world of finance by allowing banks, investment firms, financial advisors, and other institutions to offer more accurate, personalised and speedy service. It can analyse large sets of data and provide research reports, streamline insurance underwriting, protect against fraud, and more.
As ChatGPT becomes more advanced, it will likely play an even bigger role in the finance sector. By making financial services and advice easier and more accessible, it has the potential to help millions of people better manage their finances, while helping banks, advisors, and investment managers provide more personalised support for their clients.
Of course, ChatGPT is still developing, and no one can say for sure where it will take us next. But it’s certainly something to watch!
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