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Interesting and entertaining write-up of the high-level, sunny-side-up features of AI in the Banking scenario. Thanks for this.

I suggest that in parallel we also start publicly looking ‘under the hood’ of the approaches and promises. AI is not a singularity, AI is a large variety of capabilities, types of knowledge representations, learning mechanisms. Each of them has properties, features, risks and issues to it.  

Using one simple (AI-free) example from the text: Being able to lock my car remotely is maybe a cool function, but it means at the same time I provide the infrastructure for someone else to remotely open it. I personally lock my car from nearby, when I leave it. I’d never want this to be a truly remote feature. I do not have a problem that asks for this solution. So I’d better avoid the costs and risks that come with it.

Same is applicable in the banking and insurance context, when deploying AI solutions. We must come from the problem side, look into solution options (an many times, simple statistics is the best solution) and consider their applicability as well as their risk profile (e.g. false positives, false negatives and their consequences in the given context). This is valid for both, the customers and the institutions.

I believe this space needs a lot of education of customers, businesses and IT departments in order to shape and manage the expectations – and reduce the frustrations that are upon us in the brave new smart world we are heading towards.

Agree with Matt. Actually, reinventing 'core banking systems' shouldn't be that hard. In its core it's a high availability transactional system. Processing a large amount of transactions should be a commodity, nothing special. Be it payments or securities or similar. And yes, if you do it today, you add in real time, block chain, smart contracts, machine learning and self-driving to fill your buzzword-bingo sheet like everyone else.

However, what banks struggle with is the integration into dozens of applications in the banks' system universe. The interdependencies are massive. Bringing the core into RTTaaS (Real time Tx as a service...) is great, but the whole lot of other systems needs to be exchanged or adapted accordingly. Thus, moving into the right direction requires much much more work and investment than just a better core. It will become a revamp of the whole architecture. This makes it so incredibly expensive and difficult.

And, it is a project that can't be done with new systems and new resources alone. It has to be sold to the work force that was happily supporting the 'old world' over decades and feels threatened by any move into new directions. This is not a plug-and-play exercise, and that's why it is procrastinated all too often. 

Should we be surprised? Here is what we knew so far:

Creating a universal infrastructure based on secret keys for all participants is hard - see the history of e.g. PKI.

Applying good cryptography is hard - the maths don't lie, but the issues always are with implementation, integration, endpoint security, the humans involved, etc.

Creating transaction systems with high availability, reliability, accessibility and security is hard – and it does not get easier when distributing part of that work to others.

Blockchain is a great and genius concept, but a highly non-trivial one and it is based on many foundations like the ones just mentioned. There is no solution to it, magically solving all problems that have plagued Banking IT and Security in the past decades.

Creating applications on top of any transaction system increases complexity even more and introduces new vulnerabilities outside the controllable area of the underlying transaction system (see the issue at hand here, or recent issues with SWIFT).

Widespread acceptance of such new FinTech by the 'common man' (as said by KS) will depend on the ability of the FinTech community to resolve such issues transparently as they appear. They will continue to appear.

Prevent, Detect, Respond. There is no 100% Prevention. Common wisdom, also valid for the Blockchain.