Financials

<h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</span></h2><p class="MsoNormal" style="text-align: justify;">As a Pre-Sales Lead specializing in Gen AI &amp; Cloud, I bring extensive experience in leveraging cutting-edge technologies for business solutions. At Tredence Inc., I've been actively involved in designing and delivering impactful partner strategic cloud solutions, focusing on AI and GenAI applications for BFSI.</p><p class="MsoNormal" style="text-align: justify;">My role involves ideating, designing, and launching new products and accelerators built on platforms like Snowflake and Databricks, which often incorporate AI and GenAI capabilities. I lead solution design for AI-driven projects and empower teams through knowledge sharing in these areas. My experience at PwC and NTT Data also involved integrating AI solutions into cloud and IT architectures for various sectors, including BFSI and government.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q2. Are there recent or planned investments in gen AI technology to improve the operational efficiency of the BFSI?</span></h2><p class="MsoNormal" style="text-align: justify;">As per Mckinsey's report of 2023-&nbsp;Recent investments in generative AI aim to enhance operational efficiency in the BFSI sector. Generative AI could add $2.6 trillion to $4.4 trillion annually, with 75% of the value coming from customer operations, marketing, sales, software engineering, and R&amp;D.</p><p class="MsoNormal" style="text-align: justify;">Banking could see an additional $200 billion to $340 billion in value annually. Generative AI automates lower-value tasks, enhances knowledge worker productivity, and drives workforce transformation. While specific investment figures aren't mentioned, the significant potential value indicates a likely increase in investment in this technology to improve operational efficiency and customer interactions in the BFSI sector.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q3. What is the current demand/volume in the gen AI technology market? How are key players adapting?</span></h2><p class="MsoNormal" style="text-align: justify;">Current demand/volume specifics answered in the previous question, regarding adapting: Banks and Insurance companies are Investing heavily in research and development to improve the capabilities of generative AI technology.</p><p class="MsoNormal" style="text-align: justify;">Some general use cases:</p><ul style="margin-top: 0cm; text-align: justify;" type="disc"><ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="mso-list: l0 level2 lfo1; tab-stops: list 72.0pt;">Expanding product offering</li></ul></ul><ul style="margin-top: 0cm; text-align: justify;" type="disc"><ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="mso-list: l0 level2 lfo2; tab-stops: list 72.0pt;">Focus on customer experience- Investing in AI-powered chatbots to improve customer service and experience- personalized services and enhanced engagement.</li></ul></ul><ul style="margin-top: 0cm; text-align: justify;" type="disc"><ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="mso-list: l0 level2 lfo3; tab-stops: list 72.0pt;">Enhancing risk management capabilities using generative AI-powered predictive analytics</li></ul></ul><ul style="margin-top: 0cm; text-align: justify;" type="disc"><ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="mso-list: l0 level2 lfo4; tab-stops: list 72.0pt;">Automating back-office processes such as data entry, compliance, and reporting</li></ul></ul><ul style="margin-top: 0cm; text-align: justify;" type="disc"><ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="mso-list: l0 level2 lfo5; tab-stops: list 72.0pt;">Improving customer insights using generative AI-powered data analytics.</li></ul></ul><ul style="margin-top: 0cm; text-align: justify;" type="disc"><ul style="margin-top: 0cm;" type="disc"><li class="MsoNormal" style="mso-list: l0 level2 lfo6; tab-stops: list 72.0pt;">Claims processing and adjudication, Underwriting, Policy administration and management</li></ul></ul><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;"><strong>Examples</strong></p><p class="MsoNormal" style="text-align: justify;"><strong>JPMorgan Chase</strong>: Investing in AI-powered chatbots and predictive analytics</p><p class="MsoNormal" style="text-align: justify;"><strong>Bank of America</strong>: Enhancing customer experience through AI-powered virtual assistants</p><p class="MsoNormal" style="text-align: justify;"><strong>Citigroup</strong>: Investing in AI-powered risk management and compliance solutions</p><p class="MsoNormal" style="text-align: justify;"><strong>Lemonade</strong>: Using generative AI for claims processing and underwriting</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q4. Who are the main players in the gen AI, and what market share or position does each represent?</span></h2><p class="MsoNormal" style="text-align: justify;">The generative AI market is led by key players offering a range of solutions and services. Some of the main players and their focus areas:</p><p class="MsoNormal" style="text-align: justify;"><strong>OpenAI</strong>: Known for its GPT series, OpenAI is a leader in natural language processing and generative AI.</p><p class="MsoNormal" style="text-align: justify;"><strong>Microsoft</strong>: Offers a range of generative AI solutions, including text and image generation, through its Azure platform.</p><p class="MsoNormal" style="text-align: justify;"><strong>AWS</strong>: Provides generative AI services, such as text and image generation, through its cloud platform.</p><p class="MsoNormal" style="text-align: justify;"><strong>Google</strong>: Through its Google AI and DeepMind subsidiaries, Google develops generative AI solutions, including text and image generation.</p><p class="MsoNormal" style="text-align: justify;"><strong>Adobe</strong>: Offers generative AI-powered creative tools, such as Adobe Fresco and Adobe Photoshop.</p><p class="MsoNormal" style="text-align: justify;">Other notable players in the generative AI market include:</p><p class="MsoNormal" style="text-align: justify;"><strong>Anthropic</strong>: Focuses on developing safe and steerable AI models.</p><p class="MsoNormal" style="text-align: justify;"><strong>Midjourney</strong>: Offers a generative AI platform for image and video creation.</p><p class="MsoNormal" style="text-align: justify;"><strong>Insilico Medicine</strong>: Develops generative AI solutions for drug discovery and development.</p><p class="MsoNormal" style="text-align: justify;"><strong>Lumen5</strong>: Provides a generative AI platform for video creation and content generation.</p><p class="MsoNormal" style="text-align: justify;"><strong>AI21 Labs</strong>:&nbsp; Develops generative AI solutions for natural language processing and content generation.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q5. What are the best growth opportunities in the market, and why?&nbsp;</span></h2><p class="MsoNormal" style="text-align: justify;">The generative AI market presents significant growth opportunities in the Banking, Financial Services, and Insurance (BFSI) sector. AI-powered customer service, risk management, and compliance are key areas of focus.</p><p class="MsoNormal" style="text-align: justify;">Generative AI can enhance customer experience through personalized financial advice and portfolio management. It can also improve risk assessment and fraud detection, reducing losses and improving overall risk management.</p><p class="MsoNormal" style="text-align: justify;">Additionally, generative AI can automate compliance reporting and monitoring, reducing the administrative burden on BFSI institutions. In insurance, generative AI can streamline claims processing and underwriting, improving efficiency and reducing costs.</p><p class="MsoNormal" style="text-align: justify;">Overall, generative AI has the potential to transform the BFSI sector, enabling institutions to improve customer satisfaction, reduce costs, and drive revenue growth. As the technology continues to evolve, BFSI institutions that adopt generative AI solutions will be well-positioned to stay competitive and capitalize on new opportunities. By embracing generative AI, BFSI institutions can unlock new levels of innovation, efficiency, and growth.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q6. Are there any mergers and acquisitions/consolidations that are expected in the gen AI industry?</span></h2><p class="MsoNormal" style="text-align: justify;"><strong>Recent Acquisitions</strong></p><p class="MsoNormal" style="text-align: justify;">There have been recent acquisitions in the generative AI industry, such as MosaicML being acquired by Databricks for $1.3 billion and Casetext being acquired by Thomson Reuters for $650 million.</p><p class="MsoNormal" style="text-align: justify;"><strong>Predictions for Future Acquisitions</strong></p><p class="MsoNormal" style="text-align: justify;">Big tech companies like Google and Meta are likely to make major generative AI acquisitions, while companies like Apple and Amazon may not enter the generative AI M&amp;A race.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?</span></h2><p class="MsoNormal" style="text-align: justify;">As an investor, I would ask the following critical questions to senior management:</p><p class="MsoNormal" style="text-align: justify;"><strong>Competitive Advantage</strong></p><p class="MsoNormal" style="text-align: justify;">How does your generative AI technology differentiate from others in the market?</p><p class="MsoNormal" style="text-align: justify;"><strong>Scalability</strong></p><p class="MsoNormal" style="text-align: justify;">What is your strategy for scaling your generative AI solutions to meet growing customer demand?</p><p class="MsoNormal" style="text-align: justify;"><strong>Data Quality and Availability</strong></p><p class="MsoNormal" style="text-align: justify;">How do you ensure access to high-quality, relevant data to train and fine-tune your generative AI models?</p><p class="MsoNormal" style="text-align: justify;"><strong>Business Model and Revenue Streams</strong></p><p class="MsoNormal" style="text-align: justify;">What is your business model for generating revenue from generative AI solutions?</p><p class="MsoNormal" style="text-align: justify;"><strong>Long-term Vision</strong></p><p class="MsoNormal" style="text-align: justify;">What is your long-term vision for the company's role in the generative AI market, and how do you plan to maintain leadership and innovation?</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt;"><span class="ui-provider bdb bdc c d e f g h i j k l m n o p q r s t bdd bde w x y z ab ac ae af ag ah ai aj ak" dir="ltr"><em>This article was contributed by our expert </em></span><a href="https://www.linkedin.com/in/sparsharora/" target="_blank" rel="noopener"><em>Sparsh Arora</em></a></span></p><p class="MsoNormal" style="text-align: justify;"><span class="ui-provider bdb bdc c d e f g h i j k l m n o p q r s t bdd bde w x y z ab ac ae af ag ah ai aj ak" dir="ltr"><em><em><a id="ember732" class="ember-view LlUdRrxcQEOcoCKaGPwNJsazPvElChbiYzmBw" href="https://www.linkedin.com/in/sparsharora/overlay/about-this-profile/" aria-label="Sparsh has verifications" aria-describedby="artdeco-hoverable-artdeco-gen-61">&nbsp;</a></em></em></span></p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p>