I attended a prestigious university. You could pretty much do what you liked (including nothing) for the three years and the degree was awarded for 30 hours of exams in a single week. In the exam room you couldn't copy work or pay someone else to do it or consult a chatbot. You knew the subject or you didn't. So you don't have to change the teaching. You could change the examining.
This is why we have retakes. If your coursework results in lower grades than fellow students who cheated (with or without AI) there's no such recourse.
Even assuming all the students do it in good faith, there are factors other than knowing the material that can affect their performance on coursework. For example one person may have access to a well equipped, ergonomic, quiet space and plenty of undisturbed time in which to complete the assignment, while another may not.
The major benefit of exams is that everybody is taking them in, as far as possible, consistent and controlled conditions. It's not ideal, but I think it's better than the alternatives.
Some unis only allow retakes if you totally fail. They don't let you optionally choose to retake to try to do better, so no, that's not a solution that works for everyone.
The ultimate reckoning may be that the model of teaching people how to think is now deprecated, as the ability to think and reason can now be outsourced in a way that is much more direct and powerful compared to search engines and the internet.
I don’t think it’s bad, per se, but ChatGPT has effectively made it pointless to do certain kinds of assignments now.
A lot of professors have been teaching the same way for many years. It’s a reckoning.