Shaping the Future of Financial Services: Navigating Emerging Technologies with Sudhir Pai

Sudhir Pai, CTIO- Financial Services, SBU at Capgemini, shares insights on balancing innovation with resilience in financial services in a candid conversation with Praveen Mokkapati of Nasscom AI. Key themes include role of Emerging Technologies, sustainable AI adoption, compute efficiency, and eco-digital solutions, focusing on inclusivity, regulatory compliance, and addressing societal challenges like climate change.

Question 1: Reflecting on 2024, from your vantage point in financial services, what were the key takeaways for the industry? Sudhir Pai: 2024 was a year marked by the continuity of transformation programs, particularly around data and digital. However, there was a clear cautiousness in the approach. Companies focused on resilience, managing risks better, and navigating increasingly complex regulations. Incumbent organizations have made simplification and modernization a priority, ensuring systems agility to meet today’s demands. While transformation remains a constant, the emphasis is on doing it thoughtfully and sustainably.

Question 2: Looking ahead to 2025, do you foresee the same trends continuing? Will companies loosen their purse strings and invest more in digital transformations? Sudhir Pai: We’re calling 2025 the year of ‘innovation equilibrium’. It’s about balancing innovation—the ‘cool stuff’—with critical aspects like cybersecurity, data privacy, and regulatory compliance. Organizations will aim to streamline their approach, moving from isolated experiments to integrated deployments. This ensures ideas transition seamlessly from concept to execution.

In addition to AI, focus will also be on computing technologies. As businesses scale, the demand for compute power at lower costs will grow. Additionally, while much of 2024 focused on applying AI to solve familiar problems like customer service, software engineering, 2025 could see breakthroughs addressing broader challenges like climate change and societal complexities.

Question 3: Generative AI has captured boardroom attention in recent years. What are the headwinds and enablers for AI adoption in financial services? Sudhir Pai: Generative AI began gaining traction in late 2022, and most organizations started experimenting with it. The initial focus was on using AI for productivity gains and cost savings, particularly in software engineering. However, as the technology matured, challenges became apparent:

• Justifying ROI: Measuring and reporting the impact of AI investments remains complex.
• Operational Shifts: Deploying AI effectively requires mindset and operating model changes, not just technological tweaks.
• Critical Applications: Questions about whether AI can handle sensitive tasks like managing risks or autonomous decision-making remain.

Industry is categorizing financial services offerings into three layers:

• Assisted: Human interaction remains essential, especially for high-touch services.
• Augmented: Technology supports human processes, such as automated onboarding.
• Autonomous: Full automation, where technology makes decisions independently. Recent advancements in AI Agents.

The right balance between these layers is crucial for efficiency, profitability, and societal responsibility.

Question 4: With AI adoption comes the responsibility of ensuring safe and ethical outcomes. How does your organization help clients strike this balance? Sudhir Pai: Our “Generative AI lab” is backed by extensive research & collaboration to pursue a better, sustainable, and trusted AI-enabled future. Capgemini research in collaboration with Digital Data Design Institute at Harvard recently published a point of view on the dual transition to a sustainable and digital economy. We refer to this as “eco-digital” solutions, which combine digital transformation with sustainability and inclusivity. For us, sustainability isn’t limited to reducing carbon footprints; it’s about ensuring inclusivity and accessibility in every digital transformation initiative.

Whenever decisions are made, we evaluate them through the lens of long-term impact. Is the solution accessible to diverse set of users? Is it designed with inclusivity in mind? These considerations guide our role as strategic partners in our clients’ digital transformation programs.

Question 5: AI and sustainability often seem at odds, given AI’s energy demands. How is Capgemini addressing these challenges? Sudhir Pai: Based on our TechnoVision Executive companion, “Small will be the new Big” when it comes to Generative AI - the quest is on for smaller LLMs that require significantly less resources to train and operate will continue.
Additionally, we’re investing in next-generation AI architectures like Liquid AI, a solution from a MIT spinoff. These liquid foundational models (LFMs) require significantly less compute power, reducing energy consumption.

Our collaboration with companies like Mistral, a French AI leader, further underscores our commitment to sustainability. By rethinking how models are trained and deployed, we aim to reduce both costs and environmental impact.

Sudhir Pai: Financial services are at a critical juncture. Balancing innovation, operational resilience, and sustainability is key to shaping the future. As we look ahead, the industry must focus on thoughtful AI adoption, addressing not only business efficiency but also broader societal and environmental goals.

Praveen Mokkapati: Thank you, Sudhir, for these incredible insights. Your perspectives provide a valuable roadmap for the BFSI sector as it navigates these transformative times.

Keywords: #GenerativeAI, #BFSI, # FinancialServices, #BankingandFinance, #DigitalTransformation, #AIAdoption, #Cybersecurity, #AIInnovation #EcoDigitalSolutions

Disclaimer: This article is an opinion piece in interview format.