The Road Ahead For AI In Banking

In 2024, the banking sector had quite a year!

From a regulatory perspective, the EU AI Act was introduced reinforcing transparency as well as the safe, ethical, and responsible use of AI. The law is particularly important and relevant for the banking sector as AI technology (especially statistical AI) is already used broadly in credit checks as well as pricing and risk assessment in life and health insurance. However, there is global debate as to the right approach for regulations in AI and open banking / data protection.

Last year, the King’s Speech contained measures to enhance open banking practices in the UK and move towards an open finance framework. In the US, the Consumer Financial Protection Bureau (CFPB) layed out the ‘Personal Financial Data Rights’ rule, giving consumers more control over their financial data. Whether this remains in place with the new administration is unclear.

On a more practical note, in 2024, we saw how AI (especially the generative kind) can help financial services address their legacy concerns. Additionally, with cyber threats becoming more and more sophisticated, it was positive to see how AI continued to be high on the agenda.

Now as we settle into 2025, we’re already seeing a lot of appetite for AI adoption including plans spearheaded by different governments – such as the infrastructure investment just announced by the US administration, resulting in a continued national debate on the overall role of AI. 

With that said, when it comes to banking these are some core areas the sector will leverage advanced technology for, and ever more so this year.  

GenAI, Machine Learning and ‘Agentic’ automation in 2025 

Starting off with generative AI (GenAI) and machine learning, a lot more banks will apply these advanced technologies to modernise their legacy systems. For example, sales and marketing will use GenAI to generate content and leverage machine learning to analyse the performance of the content. This will help them spot unique patterns and trends and will inform a more targeted strategy. Additionally, they will also continue to apply complex, real-time decisioning AI to select the next best sales or service offer to present to customers in app, web via email or in person.

Servicing and operations are other areas within banking where we’ll see more AI-powered solutions being deployed. Socratic AI will be the preferred tool to coach workers due to its real-time, bespoke training and performance capabilities ideal for both new joiners and existing employees. GenAI tools will also provide a helping hand in analysing and summarising meeting notes and customer interactions, collecting valuable insights that will boost decision-making and customer service efficiency.

Teams will also leverage GenAI to access policy and process documents and support staff with completing their tasks more effectively. Machine learning and process mining will, in this space, be used to detect areas that need further improvement. By analysing existing systems, they will uncover process blocks, inefficiencies, and optimisation opportunities. Customers will also benefit from the technology as it’ll easily provide them with access to product policy and service documentations via a more intelligent chatbot. As a result, they will be able to receive relevant information in real-time before human interaction is needed.

It's in the servicing, operations and direct customer interaction areas where the ‘agentic’ workforce will come to bear first. Whilst the term ‘agentic’ is new, the concept is not – basically of having an intelligent automation process, an interaction layer where information can be shared and then an action take place. Voice AI and intelligent chatbots have been doing this for a while now. Admittedly to different degrees of success, and the technology underpinning this has advanced superfast in the last few years. We are now at a point where the combination of automation, AI and GenAI can vastly improve the capability of an automated agent. This will itself drive a large amount of adoption.

Customer-centric strategies

Banks will continue their mission to achieve the right balance between online digital customer engagement and human in the moment advice and assistance. Getting this right will require a system that can be easily adjusted and act on real-time customer interaction data while also delivering the best next steps. Being able to integrate different channels as seamlessly as possible with no loss of progress is also critical.

A true differentiator for banks this year will be the service quality offered especially once a customer has moved past pricing and product features. Being able to offer tailored advice digitally and then effortlessly move to in person assistance will help increase customer engagement and enhance outcomes for both customers and the banks.

Even though more and more banks are trusting advanced technologies to transform their processes, there are some channels that remain disconnected. Additionally, sales and service teams are still using siloed technologies. It’s therefore positive to see that there is a growing appetite for digitisation and automation in the sector.

As we move through 2025, we’ll see a more focused approach on achieving optimum business results by leveraging the right technology. Margin pressures will up the ante on business cases and efficient outcome delivery. Having said that, with any AI or systems implementation, banks will continue to be focused on  risk management, integration and testing, making sure regulatory, ethical, privacy, transparency and other risk needs are addressed. Having a well-trained internal transformation team supplemented by external advice is usually  key to success here.