LEARNER · GLOBAL
What is RAG? Why banks use it to ground AI on real data instead of hallucinations
RAG (Retrieval-Augmented Generation) combines a language model with a search engine: before answering, the AI fetches relevant documents from your knowledge base and incorporates them. This reduces false claims (hallucinations) and keeps answers grounded in current, verified data—critical for compliance and risk reporting.
WHY IT MATTERS
RAG is the foundation for safe enterprise LLMs in banking. Instead of an LLM making up numbers, RAG ensures it quotes from real policies, regulatory filings, or customer records. Every major bank is building RAG pipelines for KYC, AML, and advisory.