We Think of AI Only as Optimization – But What If AI Fundamentally Changes Banking?

Introduction to an AI Series with 8 Articles

A different view on AI is needed

In the banking sector, as of summer 2024, artificial intelligence remains largely in the background, or, when in use, mainly within operations and occasionally in innovation labs. When AI does play a role in the front-end, it is typically in presentation rather than in actual decision-making processes. Many so-called AI initiatives, such as those in credit scoring or robo-advisors, utilize existing technologies in a rather basic way and, particularly in Europe, are caught between the drive for technological innovation and stringent regulatory requirements.

Most current studies and research on artificial intelligence in banking are heavily focused on optimizing existing processes and applications using AI technologies. The emphasis is often on improving current banking use cases through AI, such as automating customer support or enhancing back-office efficiency. However, there are few approaches that address the more fundamental and radical question: "How will artificial intelligence transform banking as a whole?" This question demands a shift in thinking and a strategic reorientation that goes beyond merely applying existing technologies.

Recently, the company Skyfire has made headlines with the announcement of a new AI-based agent system. These "AI Agents" are designed to autonomously handle complex tasks that previously required human intervention. The announcement highlights the rapid pace of technological development and its potential impact on the financial industry. These innovations have prompted me to launch a series to explore more deeply the changes and challenges arising from the increasing use of artificial intelligence in the banking sector.

8 opinions and a fair bit of speculation

Over the coming weeks, I will be publishing individual topics:

1. Utilization and Ownership of Channels and Changes Driven by AI
   (An exploration of how artificial intelligence could alter control over digital channels, particularly regarding the question of who owns and operates these interfaces—banks, technology companies, or the customers themselves.)

2. Competition and Cooperation: How Big Tech, Fintechs, and Traditional Banks Will Operate in an AI-Dominated World
   (An examination of the dynamics between major technology firms, innovative fintech companies, and established banks when AI becomes a central competitive factor, and how these players might either collaborate or compete.)

3. The Evolution of Trust: How to Build Confidence in AI-Based Financial Services
   (An investigation into the factors that foster trust in AI-driven financial solutions, and how companies can strategically leverage this to increase customer acceptance.)

4. Changing Customer Relationships: From Personal Advisor to AI Interaction – To What Extent Will Customers Accept AI?
   (An analysis of how customer interactions with financial service providers are evolving as AI takes on the role of the advisor, and what limitations customers may set on accepting AI-based interactions.)

5. Ethics and Responsibility: Who Is Liable When AI Makes a Wrong Decision?
   (A discussion of the legal and ethical challenges arising from the automation of financial decision-making, and how companies and regulatory bodies might address these issues.)

6. The Role of Data: How Artificial Intelligence Redefines the Importance of Customer Data
   (Insights into the growing importance of data in the AI-driven financial world and how companies are developing data strategies to offer personalized and effective services.)

7. The Invisible Bank: Will Banking Become a Seamless Background Activity?
   (Exploring the possibility that banking services could become integrated into everyday activities without active customer involvement, and what impact this would have on the perception of financial services.)

8. The Future of Jobs in the Financial Sector: What Skills Will Be Needed in an AI-Driven World?
   (An analysis of how the job landscape in the financial sector is changing due to AI, what new skills will be in demand, and how the role of humans in the financial industry may evolve.)