The opportunities and pitfalls of generative artificial intelligence (AI) have yet to be fully felt by businesses, no matter the vertical.
But as Shaunt Sarkissian, founder and CEO of AI-ID, told PYMNTS’ Karen Webster, the past several months have given businesses a chance to take stock of what’s happened and what lies ahead.
“Companies have finally gotten to the point where they’ve all taken a deep breath,” said Sarkissian.
Even the biggest companies may have felt like the proverbial deer in the headlights, confronting a technological disruption that seemed to have sprung fully formed from the head of Zeus (and yet, firms like Google have been working on the technology for years).
The genie’s out of the bottle. Generative AI is used to produce content and data, and outbound content is often difficult to distinguish from human-generated content, leading to a world where trust in data and content is at an all-time low.
But it’s time now to refocus and develop an AI strategy that is core to enterprises’ central missions. No matter the ways and means in which AI is being harnessed, it’s incumbent on firms to mull how they can enhance value rather than just chase a trend, he said.
At a high level, generative AI has the potential to create a new data layer, like when HTTP was created and gave rise to the internet beginning in the 1990s. As with any new data layer or protocol, governance, rules and standards must apply, Sarkissian said.
From a regulatory standpoint, there is a need to create an arena in which everyone can compete but with some level of control to ensure that the technology is not destructive. Sarkissian suggested that governments want to come in and say, “How do we create a playing field in which everybody can compete, but we put a bit of a harness around it, such that they compete in a way that makes sense, in a way that it doesn’t destroy the world and in a way that we can actually see?”
It is up to the industry to find ways to harness the power of generative AI while minimizing its potential for harm.
The European Union has passed legislation to ensure the safety and ethical use of AI systems. However, some experts argue that the EU may have been too quick to regulate and perhaps rein in AI, potentially hindering the industry’s growth and innovation.
Sarkissian said the EU may have shoehorned AI regulation into an existing GDPR regulation, rather than going deeper to create a more comprehensive regulatory framework.
The industry has been unable to self-regulate, leading to calls for government intervention. Sarkissian said the competitive nature of the industry could lead to a race in AI development, where companies prioritize speed and efficiency over safety and ethical considerations.
“It tends to be the Valley’s mantra for better or worse in most industries, and it’s OK because the damage and negativity that could come out of that is pretty minimal,” Sarkissian said. “This is far too existential. This could create an existential threat.”
Generative AI poses a unique challenge when it comes to regulation, as determining the source of content and its accuracy is difficult. This has significant implications for businesses that rely on AI-generated content, as well as for individuals who consume it.
“You actually get very nicely organized, coherent feedback, but you don’t really know the source of any of it,” he said. “And if you’re not really an expert, you don’t know if it’s wrong.”
“So, you continue to sort of pass on things that are incorrect,” Webster said. “That’s what I worry about.”
The regulation of AI will have far-reaching effects on the industry and the broader economy. The industry must work together to establish best practices and standards to prevent negative regulation (and in the U.S., legislation will likely be piecemeal, he said).
“For the good of the industry, let’s start working together now, so it doesn’t spin off the rails and we get half-handed regulation, and nobody wants that — overly negative regulation,” he said. “I don’t think it’s going to ever self-regulate, and that’s why I think the government understands it.”
Transparency in AI-generated content is crucial to establish trust between businesses and their customers. Sarkissian drew an analogy to SSL certification, stating that just as SSL certification provides a secure connection between a website and its users, transparency in AI-generated content can establish trust between businesses and their customers. Webster added that the potential for a new data layer in AI-generated content could provide even more information and establish even greater trust.
However, the potential for AI-generated content to disrupt search has raised concerns about protecting content and authenticity. Sarkissian stated that SEO optimization in AI-generated content is necessary to ensure that businesses can protect their content and maintain their authenticity in the face of this disruption.
Looking ahead, there’s a place for generative AI to become an embedded part of the tech that runs any business, large or small. The key, Sarkissian told Webster, is to make sure the genie that has been let out of the bottle is “productive and not destructive.”
The new administration is barely a month old, so it’s too soon to tell exactly what financial services regulation will look like. But with the pause on rulemaking and the overall pause on the Consumer Financial Protection Bureau in place, it seems like we’re headed into an age of regulatory relaxation.
And as Splitit CEO Nandan Sheth told Karen Webster, financial institutions (FIs) may be more open to new ways of thinking about their businesses, and where innovation fits into their near- and long-term roadmaps, which opens the doors to new partnerships with FinTechs.
For FinTechs, too, the competitive and regulatory landscapes are changing, “but it will be easier for new FinTechs to come to market, he said. No matter what happens this year and beyond, a few principles will never change, Sheth said as part of the “What’s Next in Payments” series on what it means to be a FinTech in 2025.
At the heart of a FinTech that’s servicing a consumer, said Sheth, key expectations of those firms include “simplification, personalization and the ability to take multiple relationships and manage them in one place.”
Consumers juggle as many as half a dozen (or more) FinTech apps on their phones, which means that the simplicity mentioned above is sorely lacking. We’re likely headed toward a future where a “FinTech dashboard” will give consumers a single point of access through which to manage their banking and FinTech relationships “and put different relationships on one screen.” Those efforts may be spearheaded by an aggregator with integrations into multiple banks or a yet-unforeseen entrant into the FinTech realm. But more immediately, and for Splitit, which helps merchants and FIs offer credit card-based installment plans to consumers, there’s still a bit of wait and see in terms of allocating budgets for innovation and new projects.
“We’re not going to [allocate] 100% of the budget in the first two quarters of 2025,” he said, but in tandem with conversations with FIs, Splitit will build out a “lean framework” for technology in the new regulatory environment — a staged, rather than all-in approach.
“Unless you ‘stage’ potential changes,” he told Webster, “you could be blindsided — and by the time you start doing the work that you needed to do, it’ll be too late” to seize on new opportunities. “It takes a lot of actors, money and time … to accelerate our growth trajectory and market share.” He added that 2025 will be a busy year for forward thinking FinTechs, but building the next beachhead will rest with executives making sure that they are looking around corners while getting ready for what comes next.
At the moment, there are other headwinds beyond regulatory uncertainty, said Sheth, noting inflation is a concern for all enterprises. Banks are taking a similar wait-and-see approach to new tech and initiatives as they measure returns on investment and the volatility tied to tariffs.
Scale matters, and artificial intelligence (AI) and machine learning, along with deep automation, will optimize the value proposition of FinTechs, said Sheth, as FIs and merchants engage with the new layers of tech that are being enabled.
“More powerful personalization will be powered by AI and machine learning … and personalization is going to happen at lightning speeds where you couldn’t possibly do it before,” he said.
As he told Webster, “the ‘new age’ FinTechs that win will flatten the ecosystem — and in 10 years, payments and financial services are going to look very different.”