LEARNER · GLOBAL
What is Retrieval-Augmented Generation (RAG)? Why banks are betting on it for compliance and risk.
RAG is a technique that lets an AI model (like ChatGPT) fetch relevant documents from your bank's database before answering a question. Instead of relying only on what it learned during training, the model retrieves up-to-date policies, regulations, or customer records—then synthesizes an answer grounded in your actual data. Hiscox's insurance quote tool likely uses RAG to pull live policy rules and prior claims before generating quotes.
WHY IT MATTERS · EDITORIAL ANALYSIS
RAG solves the 'hallucination' problem: models no longer invent facts. Banks can deploy AI chatbots and compliance assistants on sensitive data without retraining the model, cutting deployment time from months to weeks.