A new report shows AI will power personal customer experiences in the digital financial revolution.
Artificial intelligence will deliver personalised experiences and reshape the world of banking as we know it, according to a new report from SaaS banking platform Mambu and Google Cloud.
The Bank of the Future whitepaper identifies ubiquitous banking as the next frontier in the digital financial revolution and reveals three building blocks that will enable the future of banking:
- Customer-centric strategy: Products and services built around the customer for the customer, embedding AI technology for a hyper-personalised user experience
- Value-based AI use cases: Applications anchored on business value (revenue growth, cost-saving or risk reduction) and customer value (customer experience or time to market).
- Composable technology architecture: Flexible, cloud-based core banking software that enables true plug and play functionality to respond to changing customer needs, market dynamics or technology trends
Driving this change is a combination of disruptive forces in the market. The report shows the pandemic has increased consumer demand for always-on, personalised digital and mobile-first financial services. Unlike 20 years ago, traditional banks are no longer the go-to for those looking to move or manage their money.
With better access to cloud services and increasing competition from a new wave of fintech and non-traditional players, incumbent banks are under threat as consumers turn to neo banks and digital challengers in search of a better customer experience and utility-led services, according to the report.
"The report shows the world banks were originally created to serve no longer exists," says Mambu CEO, Eugene Danilkis.
"Historically built to last, today banks need to be built to change. If traditional players want to reposition themselves as lifestyle partners, in tune with the modern banking needs of their customers, then they must evolve rapidly - and without fear," he says.
Key to this will be their embrace of AI technology that has broad applications from fraud prevention and risk management to delivering personalised customer experiences and driving efficiencies through greater automation. But banks must act fast if they want to avoid getting left behind. Only by leveraging the capabilities of AI and cloud technologies will they be able to reimagine the customer experience and tap into new revenue streams in a competitive market.
"As the financial services industry continues to digitally transform, there is an increased need for solutions that help businesses deliver personalised experiences to customers," adds Joachim Wuest, director, Financial Services Industry, Google Cloud.
"We look forward to partnering with groups like Mambu to bring AI-powered solutions to banking organisations as they move along their digital transformation journeys."
Myles Bertrand, Managing Director APAC at Mambu, says, "In Asia Pacific, we are seeing changing consumer demands for more personalised services driving innovation in financial services.
"What this report highlights is that it's vital for banks and financial services looking to compete in the digital era to understand the value of different technologies like AI, utilise cloud-based core banking software to ensure maximum flexibility, and build their products and services based on what their customers actually want and need," he says.
The report points to changing regulations, such as the introduction of open banking and PSD2, as forces accelerating the disintermediation of traditional banking providers. With dedicated regulation now emerging for fintech and digital banks in some jurisdictions, it's a case of adapt or die for incumbent players.
But banks have one asset on their side - data. With around a billion credit card transactions every day, banks have access to one of the most significant volumes of customer data of any industry. Using AI, banks can harness this information to unlock unparalleled insights and growth.
McKinsey estimates that AI technologies could deliver up to $1 trillion of additional value each year for the global banking industry, combining a deep understanding of customer needs with the composable cloud architecture to roll out hyper-personalised services at scale.