In my last blog I discussed Digital Reality as a key CIO trend for 2018. In this post I will be discussing Powering AI.
In 2018, Artificial Intelligence will become established and widely recognised within Banks. A recent EY report identified that:
“40% of banks are using Robotic Process Automation (RPA) and machine learning, in areas such as anti-money laundering (AML) and know-your-customer (KYC)”
AI can develop and apply complex business rules in real time at a fraction of the cost of a full-time employee. With approximately 1 in 6 members of staff at a bank working directly in a control and governance function, AI will become pervasive in managing repetitive, routine control tasks such as KYC (Know Your Client) and AML (Anti Money Laundering) processes.
The elephant in the room for 2018 has to be the notion of the so called GAFA banks (Google, Amazon, Facebook, Apple).
While the tech giants have already established digital beachheads to disrupt finance (Google Wallet, Apple Pay etc), we are only now starting to see new AI powered assistants offering voice payments, such as Amazon Pay being added to the Alexa skill set and Facebook’s ‘M’ assistant.
Although the GAFA banks might not want to become fully fledged banks, technology disruptors are successfully leveraging AI to target a number of high margin banking activities, such as asset management and transaction payments.
The significant risk for banks is that new tech disruptors ‘cherry pick’ the customer relationship and high margin activities, leaving the bank to provide the balance sheet for core banking services such as lending.
Established incumbents are responding to the changing landscape. Banks have significant expertise with an untapped wealth of financial data that can be used with AI to make smarter, real time investment decisions. Separately, Banks have been busy buying fintech firms, setting up their own fintech accelerators or establishing their own Venture Capital funds to invest in new disruptive technologies.
2018 could be the year that the incumbents take on the big tech firms ….
Email : ian@IanAlderton.com
Tel : +44 (0) 7702 777770