One of the world’s most conservative industries is getting a long-overdue upgrade, as competition from fintech start-ups combines with consumer demand for always-on service to push banks toward rapid digitalization.
The transformation is akin to “changing a car’s engine and wheels mid-race, without stopping,” according to one of the many experts interviewed in the #DigitalFinance issue of Transform, Huawei’s thought leadership magazine.
Digital technology could usher in a golden age of digital banking, with artificial intelligence providing consumers with financial advice and other customized guidance.
“We suddenly have the technology with AI and so forth to provide a bank account that can actually help you manage your money,” said Brett King, futurist and author of the book Bank 4.0.
“The early wallet systems that we see today, like [China’s] Alipay and WeChat pay, and Paytia in India and Kakao in South Korea, will evolve into AI-based bank accounts that really help us with our day-to-day money management. This will be a trend we’re going to see with banks around the world, augmenting human advice with AI.”
King shares the cover with Dame Jayne-Anne Gadhia, founder of the Snoop money management app and former CEO of Virgin Money, part of the Virgin Group.
Like Brett King, she extols the potential virtues of AI for banking, while cautioning that banks cannot afford to neglect more traditional skills.
“You can’t just use a banking app,” she says. “You need to be able to understand the inputs and outputs. That easy access and easier response means we all need to be more numerate.”
Dame Jayne-Anne denies that banks have been slow to embrace full digitalization. “It’s not as simple as waving a magic wand. It’s complex, expensive, and risky. It’s a big project that people will have to plan for over many years.”
David Brear, CEO of the financial services consultancy 11: FS, has compared legacy banks and startups to the race between the tortoise and the hare.
Brear says the race still has a long way to go, noting that legacy banks have still got hundreds of millions of customers around the world, even though the fintech hares may be running faster at the moment.
He sees the modernization of banking as a Darwinian battle. “It’s not the strongest of the species that survive, but the ones most adaptable to change,” he says. “What we’ll start to see is the march towards self-driving money,” where banks automatically move their customers’ money around to deliver the best products and the best rates.
The latest interviews and other content can be found on the Transform page of the Huawei media center web site.