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Generative AI Myths That Founders Should Know

GenAI | May 14, 2024

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Generative AI Myths That Every Leader Should Know...Debunked

Generative AI, a transformative technology, is often misunderstood. Here’s an overview addressing common myths about the expectation of GenAI that every leaders should know.

Myth 1. Generative AI Creates Without Data

  • Reality: Generative AI relies heavily on large datasets to identify patterns. For example, OpenAI's GPT-4 was trained on a diverse dataset, including books, websites, and other texts, to generate coherent and contextually relevant content. Developing proprietary models is costly, requiring significant investments in resources and talent.
  • GPT-4 required over $100 million for training.

Myth 2. Perfect Out of the Box

  • Reality: Nothing is ever perfect out of the box!  Models require extensive fine-tuning for specific tasks. For instance, Google's LaMDA needs constant refinement to handle different conversational contexts effectively. Even third-party AI solutions require investment, like ChatGPT's $20/month subscription for its latest version and integrated into Microsoft 365 costs $30/month per employee.

Myth 3. Replaces Human Creativity

  • Reality: AI enhances but doesn't replace human creativity. For example, AI can assist in content creation, but human oversight is essential for nuance and context, as seen in AI-assisted journalism. The role of the human-in-the-loop is critical for tasks requiring judgment and empathy.

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  • Example: The Washington Post uses AI to generate simple news reports, but human journalists add depth and context.

Myth 4. AI Always Improves Human Performance

  • Reality: AI's effectiveness varies by task. A BCG study found GPT-4 improved creative product innovation by 40% but decreased business problem-solving performance by 23%. Training in soft skills like critical thinking and empathy is essential for successful AI integration.
  • Example: Consultants using GPT-4 for creative tasks performed better, but those using it for business problem-solving did worse.

Myth 5. High Cost Equals Better Performance

  • Reality: Effective AI deployment is more about strategic use than cost. Smaller firms using well-optimized models can compete with giants. Startups using cost-effective AI models can achieve significant efficiencies in customer service automation. Building the model is not the hardest part; transforming workflows and managing change are critical.
  • Example: Startups using open-source models like Llama can achieve significant efficiencies.

Myth 6. You Can Wait and See How Gen AI Plays Out Before Making a Move

  • Reality: Early adoption of generative AI can provide a competitive edge, as seen with Amazon's e-commerce revolution and Apple's iPhone. Companies must act now to avoid being left behind.

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  • Example: Nokia and BlackBerry were overtaken by the iPhone due to their hesitation in adopting new technology.  Another example is perhaps more famous as many of us will remember the 'kodak moment'.

Myth 7. Investing in Gen AI Will Automatically Give You a Competitive Advantage

  • Reality: Sustainable advantage requires continuous innovation and strategic use of proprietary data. The real value lies in customizing AI models to specific business needs and constantly evolving strategies.
  • Example: Google’s dominance in search is challenged by OpenAI’s innovative AI-powered interfaces.

Implications for Fintech

  • Personalized Financial Services -> AI enhances customer experiences by analyzing spending habits and offering tailored advice.
  • Fraud Detection -> AI's pattern recognition capabilities improve fraud detection, saving billions in potential losses.
  • Algorithmic Trading -> AI-driven algorithms enable more accurate and efficient trading decisions.

See:  How Fintechs Can Integrate AI for Efficiency Gains

  • Regulatory Compliance -> AI helps automate compliance processes, reducing errors and costs.
  • AI in Customer Service -> AI-powered chatbots enhance customer support.

Why This Matters

Understanding and correctly applying generative AI can lead to more efficient, innovative, and secure fintech solutions. It’s essential for fintech leaders to demystify these myths to harness AI's full potential.


NCFA Jan 2018 resize - Generative AI Myths That Founders Should KnowThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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