Marc Garay, a partner at NTT DATA Corporate & Investment Banking, discusses how generative AI-powered banking services may transform corporate risk hedging in an interview with FinTech Magazine.

Marc is right when he says that "generative AI is a force to be reckoned with." It moves quickly, expanding the frontiers of the art of the possible and igniting transformation throughout the financial sector.

These days, banks are looking to generative AI to help them provide customized product offers with an improved value-add. Other banks are using the technology to better comprehend internal organizational structures, which enables clients to make more strategic and informed decisions. NTT DATA and Armstrong Wolfe recently teamed together to support more innovation in the financial services sector.

According to Marc, "risk is an area that requires constant attention in both the corporate and banking worlds." To guarantee a secure and dependable financial environment, effective risk management is essential.

"Considering this, it makes sense to believe that the best technology should be used to control risk as effectively as possible.”

Gen AI: Taking the market into account

It goes without saying that banks must investigate and implement new AI technology. They run a serious danger of slipping behind rivals if they don't.

Marc believes that in order to satisfy market demands, a "win-win" strategy must be implemented given the requirement to integrate AI across many sectors.

"Banks' corporate and SME clients are demanding more client-centric solutions focused on enhancing risk management decisions," he continues, citing the demands of the current market.

Consequently, banks are eager to strengthen business ties by cross-selling a variety of products; however, in order to do this, a win-win strategy is essential, guaranteeing that the SME or Corporate CFO receives real value.

"A win-win strategy guarantees cooperation and data exchange between the bank and the customer, enhancing their bond even further. The partnership is designed to be profitable for both the corporate customer and the banks, who stand to gain from cooperating.

Marc understands that working together may benefit a bank and its corporate customer. Corporates will be able to enhance their risk-hedging choices and obtain services from the bank on the one hand.

He goes on, "They'll be able to benchmark their levels of risk against industry peers, receive alerts about changes in risk position, and build an integrated offering of tailored financial products to cover risks."

"Banks will experience favorable externalities for their credit quality and a plethora of cross-selling and customer engagement opportunities, as well as enhanced visibility of customer needs through transactional data."

Using AI and analytics to manage business risk

By incorporating value-added indicators and utilizing sophisticated analytics, corporate risk hedging solutions give banks a better knowledge of their present risk exposures and assist in helping them make superior hedging decisions.

Marc goes on, "Such a solution provides incremental value to a banking organization." "A basic Minimum Viable Product (MVP) that focuses on credit and nation risk migration statement together with a risk dashboard might be the initial step in the process.

"After that, this can be developed further with the ultimate goal of turning this into a comprehensive solution that uses generative AI and advanced analytics. This would include peer comparisons, hedging recommendations, and even intelligent chatbots to help clients understand the underlying causes of the risks they face."