Every industry and sector is excited about the potential of generative AI (GenAI) but that excitement is tempered by uncertainty and caution. To address these concerns and identify routes to value, organisations must understand what GenAI means for them and how to deploy it responsibly and strategically.
Research by PwC Strategy& takes a value-led approach to identifying GenAI opportunities and assessing the potential level of disruption and change in a number of industries. The research reveals significant variation in how GenAI will impact a set of different industries across the UK and EMEA, identifies some of the most compelling areas of opportunity and explores potential barriers, in analysing the value GenAI can create.
Pharmaceuticals and life sciences, along with banking, media and technology, are among the sectors with the greatest immediate opportunities for value creation, according to the research which considers six strategic viewpoints and 20 value drivers.
While no industry or sector will be untouched by GenAI, in sectors such as retail and corporate banking and insurance - where operating costs are high - efficiency is a commonly cited benefit of GenAI. This contrasts to industries such as pharma and media, where we expect more than 50% of its value to come from new revenue growth opportunities.
However, achieving such gains will rely on organisations understanding the strategic implications of GenAI, and making decisions that balance risk and reputation with the right business reward. There is a need to identify the most value-additive use cases and ensure effective governance, while also establishing the right data and technology infrastructure and managing the cultural change needed to unlock value. Similarly, GenAI should be a key consideration for investors, who will need to assess the likely impact on both current portfolios and future decisions.
“GenAI can automate and enhance aspects of almost all business operations - from customer services to software development and data analytics. But it isn't the tech solution to every problem, and the value potential varies significantly. As GenAI becomes more powerful and intuitive, we are working with organisations to identify the best opportunities to use it effectively and responsibly, while supporting the mindset shift needed among their teams to build trust in the technology and realise its full potential.”
Colin Light
Partner, EMEA and UK Strategy& Leader
Understanding the strategic implications helps define and inform the prioritisation of opportunities presented by GenAI, which range from transforming customer engagement, boosting productivity, improving competitive agility, and reducing tech debt, to optimising workforces and supply chains. The technology is being trialled across many organisations - formally and informally - but businesses must set their direction with intent. The approach must be joined up and based on a clear understanding of the value being sought and any intended and unintended consequences.
In the entertainment and media (E&M) sector, for example, GenAI can be a powerful creative tool, helping to produce content, including text, imagery, audio and video. It's also enabling deeper personalisation through the analysis of audience behaviours and preferences to more effectively target and monetise content.
As the quality, quantity and nature of content shifts, driving new pricing and customer engagement models, business models will be notably disrupted. This will impact the competitive landscape as falling costs give rise to new players - while those with the most valuable Intellectual Property (IP) will be able to drive revenue and market share.
Meanwhile, for the banking sector, GenAI will prompt significant change in the cost of serving customers - allowing banks to overhaul their customer operations - as well as improvements in sales and relationship management functions, supporting market and client-specific information. It will also see the transformation of tech functions, enabling the rapid development and testing of new software, while also helping to translate and optimise legacy systems, dramatically increasing productivity and cutting costs.
“GenAI is already showing signs of disrupting entertainment and media, creating intrigue and excitement - but also causing concern - among audiences and organisations alike. Big challenges for the industry include ethical, legal and regulatory risks, the complexity model of training and customisation required, and the need for governance structures when managing risks in customer interaction.”
Mary Shelton Rose, Partner, Leader of Industry for Technology, Media and Telecoms, PwC UK
With a clearer understanding of strategic intent, organisations will have greater confidence to prioritise the opportunities at hand. Much of the focus to date around GenAI has been around identifying cost reductions, rather than growth plays. This may reflect uncertainty around the technology’s full potential as well a cautionary response to the current economic conditions.
But identifying opportunities for growth is key - for organisations and investors alike. For organisations, there is a need to understand the appetite for significant business model reinvention and question how GenAI aligns with strategy, identity and culture, as well as how to measure return on investment. Meanwhile, investors must be aware of the impact GenAI is already having, and will need to consider how portfolios will be impacted going forward.
GenAI has already seen many success stories, but the nature of experimentation and innovation means plenty of use cases will fail. Planning for a series of GenAI experiments is the most sensible approach, with the expectation that truly transformational use cases could take a couple of years to fully prove themselves. But taking a value-led approach from the outset, and identifying similarities between use cases, will minimise the risks taken.
“There has been a rapid increase in GenAI companies being launched and funded and many offer solutions for multiple industries. Yet a lot of projects have been siloed in functions such as marketing or customer services. We’re working with organisations to unlock the value of a more holistic, strategic approach aligned to their long-term transformation ambitions and the particular challenges and opportunities in their sector.”
Nick George, Partner, Strategy& Deals
Every industry and sector operates under different regulatory pressures and GenAI creates a range of potential risks to organisations which need to be addressed through effective governance.
This may ring particularly true in heavily regulated sectors such as pharma and banking - where the highest value use cases are currently to be found. Our research indicates progress will likely be hampered by the complex regulatory environment, as well as relatively lower cultural readiness.
But these barriers must be considered in all sectors. For example, in industries such as consumer goods or retail, consumer data sets can be used to drive customer interactions with GenAI, creating potential ethical and regulatory risks, alongside a need to manage the risk of bias in the underlying models.
“GenAI presents an opportunity for the banking sector to rethink processes and people structures, as well as the organisation of outmoded data and technology systems. Firms need to be conscious of the potential risks associated with AI, and the importance of having robust governance and controls in place. However, they cannot allow this to slow the pace of change.”
Isabelle Jenkins, Partner, Leader of Financial Services, PwC UK
As organisations adopt GenAI, tech, cloud and data infrastructure will need to be set up effectively - both the technology ecosystem and the capabilities within it. For example, data in many organisations is spread across multiple systems and data infrastructure will need to be set up in the right way to be able to benefit from GenAI.
It's also worth noting that the granularity of consumer data needed can create regulatory and ethical challenges. We see this as an early barrier to developments in, for example, key use cases in the insurance sector - such as policy personalisation.
Across industries, the majority of use cases identified so far are likely to be adopted using third party GenAI apps, or to be embedded in business platforms such as ERP or CRM. The value of bespoke use cases - that use proprietary data or algorithms - need to be weighed up for financial benefits as they often cost more to create and can be slow to market.
Understanding if the data is in the right place and shape to support GenAI is an essential step, as is ensuring the right cybersecurity protections are in place around data and intellectual property.
“To access the potential of GenAI, organisations need a scalable and secure infrastructure, with accessible data set up on the cloud, supported by talent with the right capabilities. We are helping clients make informed decisions about where to start, to avoid further technology debt while accelerating innovation in a responsible way.”
Joey Jegerajan, Partner, CTO, Consulting, PwC UK and EMEA
As the use cases for GenAI become more powerful and intuitive, valuable human skills - such as applied judgement, creativity and critical thinking - will be in greater demand, to ensure the tech is used effectively. But for organisations to realise the potential of a 'human-led, tech-powered' approach, workforces will need to be upskilled and empowered to help them embrace the ways in which GenAI can accelerate and support the work they do.
Our research shows the level of disruption will be high where Research and Development (R&D), creativity and customer experience are key capabilities. Take the pharma sector: similar to banking, it has complex regulatory considerations and a relatively lower cultural readiness. The highest value use cases for GenAI in pharma - such as those that help discover and optimise new drugs - will provide significant opportunities to reinvent business models and the competitive landscape.
GenAI will transform the R&D cost base, as well as augmenting, automating and broadening access to commercial analytics and other business critical processes. But the customisation and training required of the technology, alongside the need to manage ethical, regulatory and bias risk, will prompt major changes - emphasising the need for organisations to prime their workforce and culture for GenAI.
Across the globe, PwC is advising on the opportunities for transformation and value creation that GenAI presents, as well as building and deploying hundreds of GenAI applications. If you want to discuss how we’re helping clients use GenAI, or want to discuss our research into the impact on your industry and sector, get in touch.
“Industries with strong R&D needs, and those where creativity and data analysis drive value, have really compelling use cases for GenAI right now which they should be exploring, alongside the cultural, ethical, governance and technological considerations necessary to unlock value. But all industries, even those with less immediate cases for investment, should be readying themselves for GenAI. That preparedness will translate into competitive advantage as more industries become disrupted by this technology.”
Quentin Cole, UK Management Board Member & Head of Industries, PwC UK
Strategy Partner and Deals Leader for Technology, Media and Telecommunications, PwC United Kingdom
Tel: +44 (0)7909 680182
