Digitalisation is changing banking, and the most game-changing technology over the next five years is expected to be artificial intelligence (AI).
That’s according to banking software company Temenos, which surveyed more than 300 executives from retail, commercial and private banks for its latest annual report on the future of banking.
Over three-quarters (77%) of the banking executives surveyed believe that AI will separate the winners from the losers.
Improving user experience through greater personalisation ranked highest (28%) among the most valuable uses for AI. Many banks also see the potential for AI to support new business. For example, some private banks are using advanced investment algorithms to strengthen their portfolio management. Respondents also anticipate using AI in fraud detection and back office functions.
Developing AI platforms was the focus of technology investment for 33% of executives globally – second only to cybersecurity.
Discussing the findings in an article for the World Economic Forum, Temenos chief executive Max Chuard pointed out that for AI in banking to be viable, it must be explainable.
“If AI helps a bank decide not to offer a loan, that can be life-changing and customers will need a reason why,” he said.
Because of this, regulators are increasingly requiring explainability. For example, the EU’s General Data Protection Regulation (GDPR) has introduced a ‘right to explanation’ of the output from new technologies like AI algorithms. This is one reason that 42% of the executives surveyed by Temenos cited ‘regulation around new technology’ as one of the most impactful trends for the industry over the next five years.
Pursuing advanced technology and digital ecosystems will be key to success in the long term, helping banks to “weather the coming storm and redefine their value to customers in a shifting market“, Chuard concluded.
To read more about how AI and other advanced technologies coupled with superfast, always on, ubiquitous connectivity will transform financial services and other key sectors, download your free copy of our Next-generation connectivity report.
Tags: AI, Artificial Intelligence, banking
