Generative AI on Wall Street -- Opportunities and Risk Controls

Paper: arXiv 2509.05841

Authors: Jackie Shen

Abstract

We give an overview on the emerging applications of GenAI in the financial industry, especially within investment banks. Inherent to these exciting opportunities is a new realm of risks that must be managed properly. By heeding both the Yin and Yang sides of GenAI, we can accelerate its organic growth while safeguarding the entire financial industry during this nascent era of AI.

Complexity vs Empirical Score

• Math Complexity: 1.5/10
• Empirical Rigor: 1.0/10
• Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: This paper is a qualitative overview and survey of Generative AI applications and associated risk controls within investment banks. It contains no formal mathematical modeling, statistical backtesting, or empirical datasets, functioning primarily as a high-level conceptual framework.

Research Flowchart

  flowchart TD
    A[Research Goal: Evaluate GenAI Opportunities & Risk Controls in Investment Banking] --> B[Data Inputs: Cross-Asset Banking Workflows & AI Governance Frameworks]
    B --> C[Methodology: Industry Overview & Dual-Perspective Analysis Yin/Yang]
    C --> D[Computational & Operational Assessment: Model Risk Management MRM & Operational Risk Mapping]
    D --> E[Key Outcomes: GenAI Use-Case Roadmap & Strategic AI Governance Framework]