Organizations face a critical choice as they drive generative AI innovation: move quickly or risk falling behind. Leaders are incentivized to deploy quickly to secure competitive advantages but realize that they need to tread carefully enough to ensure safety. Our recent study at LexIQ found that even the largest companies continue to grapple with balancing opportunity with risk.
Major Banks Forge Ahead with Customized GenAI Solutions
Financial services powerhouses like Morgan Stanley and Goldman Sachs are rolling out their first rounds of firmwide tools, not by relying on vendors, however, but by taking control of GenAI development themselves.
When Morgan Stanley partnered with OpenAI to build a research assistant and meeting summarizer, it wasn’t just about adopting the latest technology—it was a strategic move to ensure these tools met the rigorous standards required in finance. Similarly, Goldman’s decision to centralize GenAI development on a proprietary platform underscores a commitment to control and governance.
While they benefit from sizeable in-house technical talent and resources, and extensive institutional-scale data providing rich context for GenAI, the risk in getting it wrong in a heavily regulated industry can be particularly catastrophic. Scale in financial services is a mixed blessing for GenAI deployment and therefore the industry can serve as an illuminating case study, with insights broadly applicable to other organizations.
Governance Gaps Highlight the Need for Stronger Leadership
Despite these and other major implementations, significant gaps remain in leadership structure and governance. A recent Hackett Group study showed that while over 90% of organizations have a defined technology strategy, over 40% remain in the early stages of generative AI exploration. As expected, financial services respondents all indicated that they did have a defined strategy.
This cautious approach highlights the how organizations see GenAI as fraught with risk, and rightfully so. Unclear governance compounds this risk—without it, safely scaling GenAI deployments will be a challenge, potentially exposing firms to regulatory and operational failures. Yet many technology departments unfortunately “struggle to be perceived as strategic business partners” – a perception all too familiar to legal departments.
In recent years, legal has largely shed this perception, with CEOs and boards expecting more CLO (chief legal officer) time devoted to core business and strategy, and less to legal and regulatory work. Deloitte’s survey of CLOs found more leading strategy and enterprise transformation than ever before, and their teams among those most actively pursuing GenAI projects. However, the survey also revealed a troubling trend. Many CLOs don’t feel that roles and responsibilities for GenAI are well-defined, and they doubt whether much of the C-suite understands GenAI enough to oversee governance efforts. Technology executives bring critical technical expertise largely missing from the rest of the C-suite. But it appears that at some organizations, they just need a seat at the table—one that CLOs can use their influence to open.
The Importance of Metrics in GenAI Governance
Strong GenAI governance hinges on clear metrics and key performance indicators (KPIs). If CLOs are to lead GenAI governance, their teams need to demonstrate how these tools are delivering safe and effective results. While KPIs often focus on cost, time savings, and automation, measuring and managing underlying metrics is essential to meaningful governance.
For legal and compliance teams, these could include transaction closing volume, contract review times, policy review frequency, risk detection and incident rates, and internal “client” satisfaction. Regularly reviewing and optimizing GenAI solutions using these metrics can help ensure that governance remains results-driven and gain buy-in from other stakeholders.
Customization and Integration are Critical
Morgan Stanley and Goldman opted for proprietary tools for a reason. Off-the-shelf GenAI solutions often fall short of meeting specific enterprise needs. Beyond security and performance, solutions must integrate seamlessly into existing workflows and be customizable enough to address unique challenges. For users, switching between applications disrupts workflows, and even familiar-looking tools still lack essential features. Retraining due to unfamiliar solutions slows adoption and reduces effectiveness.
The Path Forward
At a time when GenAI can define a company’s competitive edge, the path forward is clear: integrate, customize, and govern with foresight. The stakes are high, especially in highly regulated industries like financial services.
At LexIQ, we understand the complexities that come with GenAI integration. Our GenAI-powered solutions are designed to meet the demands of these environments. We bring a team well-versed in tech implementation at complex organizations. By focusing on customization, seamless integration, and robust governance, LexIQ empowers organizations to harness the full potential of generative AI safely.
Whether you’re looking to develop GenAI tools in-house or need a partner who can provide tailored legal AI solutions, LexIQ helps you navigate these challenges with confidence.
Join our waitlist at lexiq.io and learn more about how we can support your GenAI initiatives and ensure your organization stays ahead in this rapidly evolving landscape.