Top 4 Use Cases of Generative AI in Banking in 2025

Gartner identified generative AI as a top technology trend for the banking and investment industry in the last years.¹ Generative AI’s contributions to data privacy, fraud detection, and risk management can be critical to financial services companies.

Key use cases include fraud detection, customer service automation, credit risk assessment, and document processing.

Fraud Detection

Detecting anomalous and fraudulent transactions is one of the applications of generative AI in the banking industry. In a study, researchers constructed a training set of fraudulent transactions and then utilized it in a Generative Adversarial Network (GAN), a generative model based on deep neural networks, to produce synthetic fraudulent transactions.² The synthetic data was then compared to the genuine data to see whether the GAN was capable of developing sensitivity to identify anomalous transactions. Finally, it is seen that using a GAN-enhanced training set to detect such transactions outperforms that of the unprocessed original data set.

As a result of this study, it appeared that training GANs for the purpose of fraud detection produced successful outcomes because of developing sensitivity after being trained to identify underrepresented transactions. This is an especially important application for financial services providers that deal with enormous number of transactions.

Case Study for Fraud Detection via Generative AI in Banking

Swedbank used GANs to detect fraudulent transactions.³ GANs are trained to learn legal and illegal transactions in order to detect the fraudulent ones by creating graphs that reveal their patterns. 

However, employing GANs for fraud detection has the potential to generate inaccurate results (see Figure 1), necessitating additional improvement. Explore machine learning accuracy to learn more.

(Figure 1. Source: “Challenges in modeling fraud as a binary classification problem”)

Data Privacy

The use of synthetic data has the potential to overcome the challenges that the banking industry is facing, particularly in the context of data privacy. Synthetic data can be used to create shareable data in place of customer data that cannot be shared due to privacy concerns and data protection laws. Further, synthetic customer data are ideal for training ML models to assist banks determine whether a customer is eligible for a credit or mortgage loan, and how much can be offered.

GANs are capable of producing synthetic data (see Figure 2) and thus appropriate for the needs of the banking industry. Synthetic data generation can be achieved by different versions of GAN such as Conditional GAN, WGAN, Deep Regret Analytic GAN, or TimeGAN.

(Figure 2. Source: “GAN-Based Approaches for Generating Structured Data in the Medical Domain”)

Risk Management

Establishing a risk management plan is essential for banks to maintain an appropriate level of risk exposure, identify possible risk areas, and take action to preserve profitability. Banks may suffer losses if liquidity, credit, operational, and other risks are not appropriately handled.

Besides certain software systems for risk minimization, the use of generative AI is one possible solution for minimizing such losses resulting from the lack of adequate risk management. 

With GANs, it is possible to calculate value-at-risk estimations that show the potential amount of loss in a particular period of time or to create economic scenarios that are useful for predicting the future of financial markets.^{4 5}

GANs facilitates comprehending the possibilities of volatility by generating novel and assumption-free scenarios (See Figure 3) based on historical data patterns.

(Figure 3. Source: “Scenario generation for market risk models using generative neural networks”)

Generating Applicant-Friendly Denial Explanations

Loan decisions are one of the uses of AI in the banking sector. AI enables banks to determine whether a customer is qualified for credit lending by risk scoring, as well as make informed decisions about the maximum credit limit that a customer can have, and loan pricing based on the assessed risks.⁶

Nevertheless, it’s not only decision makers who need insights loan applicants also require clear explanations of AI-driven decisions, particularly to understand why their applications may have been denied. The reason for such a need is to ensure user trust as well as to increase customer awareness so that they can make more informed applications in the future.

In this context, a conditional GAN— a variant of GAN in which the generator and discriminator are conditioned on class labels is useful for generating applicant-friendly denial explanations (See Figure 4). A two-level conditioning framework is established by arranging the causes of denial from simple to complex in a hierarchical structure, generating more transparent and comprehensible explanations.

(Figure 4. Source: “Generating User-Friendly Explanations for Loan Denials Using Generative Adversarial Networks”)

For all GenAI applications in financial services, not just in banking, read our article on generative AI in financial services.

The latest regulations require generative AI tools to ensure AI compliance, manage an AI inventory, mitigate AI bias, and other generative AI risks. One way to overcome these challenges is to deploy AI governance tools and responsible AI platforms.

For more information on other financial technology capabilities of AI, feel free to read our articles:

• KYC Automation: 5 Technologies That Increase Transparency
• Anti Money Laundering Algorithms: Tackling AML with AI  

FAQ for Generative AI in Banking

External Links

• 1. “Gartner Identifies Three Technology Trends Gaining Traction in Banking and Investment Services” (Press release). Stamford, Connecticut: Gartner
• 2. “Fiore U.; De Santis A.; Perla F.; Zanetti P.; Palmieri F. (2019).

  “Using generative adversarial networks for improving classification effectiveness in credit card fraud detection”. Information Sciences. Volume 479: 448-455.

• 3. Detecting Financial Fraud Using GANs at Swedbank with Hopsworks and NVIDIA GPUs | NVIDIA Technical Blog. NVIDIA Technical Blog
• 4. “Fiechtner L. (2019). “Risk Management with Generative Adversarial Networks”. [MSc Dissertation, University of Oxford]
• 5. Scenario Generation for Market Risk Models Using Generative Neural Networks.
• 6. “AI-powered decision making for the bank of the future” (PDF). McKinsey & Company