Artificial intelligence occupies executives’ thoughts in many ways, according to the findings of Above Steria third annual Digital Banking Experience Report. The report, produced in collaboration with Forrester and Ipsos, surveyed more than 850 senior decision makers from global banks and more than 11,000 global banking customers.

About 75% are not ready open banking systemO. The two are related, as open banking and emerging regulations push banks to turn to AI to prepare.

First, some numbers on artificial intelligence:

• 52% of banks say it offers a highly critical revenue stream;
• 63% say it will have the most significant impact on customer service;
• 45% plan to expand their investments in AI-enabled chatbots and digital assistants;
• 76% of customers would like to benefit from loyalty programs supported by artificial intelligence; AND
• 62% would like technology to help with budgets.

AI can help banks consolidate customer support that appears strong but has shaky foundations. About half of customers believe that their bank is not interested in making money. Only 27% think it offers services suited to their personal and financial situation. Furthermore, 38% believe that they have been offered uninteresting services.

Bridging the gap between AI awareness and action

While there is increased awareness of the benefits of AI, there is a gulf between that knowledge and action; 64% of respondents are aware of AI-enabled tools, available 24 hours a day, such as chatbots and virtual assistants, but only 18% use them.

Mathias Mercier indicates some factors to explain the openness of banks to collaboration.

One path to reaching these numbers is through collaboration. According to Bruno Cambounet, head of research at Sopra Banking Software, more and more companies are adopting it. In the first two reports, banks were defensive about collaboration and open banking. Now they see it as a way to create value for the end user.

What got them over the hump? Mathias Mercier, marketing director at Sopra Steria, highlights the lack of trust customers have in banks beyond the fact that they are safe places to keep money. Customization is low.

If you add fintechs and neobanks that provide more responsive services, two-thirds of customers are ready to switch brands for lower costs and greater benefits.

“It means that banks are now realizing that they could lose a lot of territory here,” Mercier said.

Banks are warming up to open banking

Cambounet said banks realize that open banking brings the benefits of reusing personal data. Whatever their thoughts, the regulations will bring them to life.

“It’s a no-brainer,” Cambounet said. “Now the data, which is stored within a bank, or any financial institution, can be shared electronically by the end user with others who take care of it to bring more value.”

Bruno Cambounet said that regardless of banks’ opinions on open banking, it is coming, so get ready.

Open banking and the realization that it can’t be all things to all people have opened the door for banks to partner with fintechs; 74% of global banks believe this is crucial to their future.

Thanks to the mass of data, banks have long believed that they own their customers. Cambounet said they now realize they can’t accommodate everyone’s preferences. Leveraging all available data, regardless of who owns it, allows for better personalization.

Changing tactics to maintain relevance

One way banks can gain relevance in this evolving environment is to serve customers not in front but behind the scenes. Cambounet said they should become invisible by providing BaaS services to other banks or non-financial operators such as integrated financial services retailers.

What lessons can North American institutions learn from Europe as they prepare for open banking? Cambounet said the first step is to prepare to deal with and cultivate the mass of data they will soon have access to.

Effective personalization takes work, and AI will play its part. However, institutions must pay attention to data protection issues and ensure that models are free of bias. Cambounet said they will have to build trust with customers, demonstrating that if they provide their data, the institution will safeguard it and provide more value.

Open banking and artificial intelligence come with great responsibilities

“Here in Europe, we have worked a lot on all the regulations to protect privacy and, honestly, it’s not easy,” Cambounet said. “Because when you do it in an ecosystem, different actors can do the work. And we are no longer in a situation where things are linear with a customer.”

With open banking, trust no longer means a relationship between the customer and a bank; it means the relationship between the customer and the entire ecosystem. In the next open banking environment, more and more institutions are turning to artificial intelligence to manage both internal processes and external relationships. They must also diligently uphold common standards for cybercrime, criminal fraud detection, and many other functions.

Focusing on a few concepts that can benefit from AI and developing clear use cases are two different concepts. Executives won’t spend money on AI without it.

“They’re exploring every single use case,” Mercier said. “Right now, at best, we have some used internally, or some chatbots go here and there. But it’s very small.”

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  Tony is a long-time contributor in the fintech and alt-fi spaces. Twice named journalist of the year at LendIt e winner in 2018, Tony has written more than 2,000 original articles on blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT’s Unchained, a blockchain expo in Hong Kong. Email Tony here.

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