Finance & Economics

AI is the future of banking – GlobalData at Money 20/20

Banks need to focus on the concrete improvements that AI can offer to their business today

AI is the future of banking – GlobalData at Money 20/20. Source: shutterstock.com

Artificial intelligence (AI) was a major theme throughout the first day of the Money 20/20, the world’s largest fintech event which is taking place in Las Vegas on 21-24 October. As a spokesperson for GlobalData noted, the potential of the technology is significant.

As cost savings and increasingly stringent regulatory requirements dominate financial services firmsu2019 agendas, AI promises an answer to both. However, its use cases are far more wide-ranging, with personalization and customer centricity, and fraud and cybersecurity dominating the discussion
Heike Van Den Hoevel, Senior Banking Analyst at GlobalData

AI is shaping a new era of personalization, giving rise to new services and new functionality for customers. The concept of personal financial management (PFM), which has struggled to take off, is being replaced by ‘personal financial coaching’ or even ‘life coaching,’ given the intertwined nature of one’s personal and financial affairs.

The industry is moving from addressing customersu2019 needs retrospectively to anticipating them using AI. Instead of analyzing and informing customers about their current financial state, providers are moving towards providing automated recommendations
Heike Van Den Hoevel, Senior Banking Analyst at GlobalData

41% of banking providers globally do not offer their clients personalized recommendations on how to manage their finances. Source: shutterstock.com

Banks able to leverage AI to provide a truly personalized banking experience and tailored recommendations will benefit from goodwill and trust. However, 41% of banking providers globally do not offer their clients personalized recommendations on how to manage their finances more efficiently as part of their PFM tools.

There continues to be a clear gap in the market that banks need to address. GlobalDatau2019s 2018 Retail Banking Insight Survey found that 61% of customers would find personalized finance management recommendations from banks a useful service
Heike Van Den Hoevel, Senior Banking Analyst at GlobalData

As the push to implement stronger authentication procedures rises, customers continue to expect a frictionless but secure banking experience. According to GlobalData’s latest research, 72% of consumers globally are ‘very’ or ‘quite’ concerned about identity theft. Yet, when asked what is more important to them when conducting a banking transaction – security or convenience – 72% of the Money 20/20 audience voted for the latter.

AI – in tandem with biometrics – addresses this security/convenience conundrum. Source: shutterstock.com

AI – in tandem with biometrics – addresses this security/convenience conundrum. Biometrics are moving beyond mere fingerprints towards multi-factor applications, such as a combination of face, voice, and behavioral biometrics, all of which can be analyzed by a specialist AI tool to offer additional security without adding unnecessary inconvenience. The latter will attract particular attention as the focus in fraud risk continues to rise; simply capturing unique, measurable identifying patterns in human activities without requiring any onerous effort by users.

Banks need to focus on the concrete improvements that AI can offer to their business today. Improving security without compromising convenience, and personalizing financial recommendations, will give rise to new and better sales opportunities. It might not be as impressive as an all-singing, all-dancing AI assistant, but these specialist AIs bring real improvements to banksu2019 current problems
Heike Van Den Hoevel, Senior Banking Analyst at GlobalData

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