Artificial Intelligence Economie Finance

AI & the Future of Banking [FREE PDF DOWNLOAD]

An industry-specific guide to the applications of Advanced Analytics and AI to the banking industry

Artificial Intelligence (AI) technologies help organisations to get smarter and more effective over time – ultimately responding to, learning from and interacting with human voices. It is predicted that by 2025, half of all businesses will be using these intelligent, self-learning systems. Across its entire breadth and depth, the banking industry is at the forefront of investigating Advanced Analytics and AI technology for use in a broad range of applications, such as customer analytics and providing wealth advice for clients. AI and the Future of Banking provides new and established banking industry professionals with the essential information on the implications of data and analytics on their roles, responsibilities and personal career development.

Unlike existing books on the subject which tend to be overly technical and complex, this accessible, reader-friendly guide is designed to be easily understood by any banking professional with limited or no IT background. Chapters focus on practical guidance on the use of analytics to improve operational effectiveness, customer retention and finance and risk management. Theory and published case studies are clearly explained, whilst considerations such as operating costs, regulation and market saturation are discussed in real-world context. Written by a recognized expert in AI and Advanced Analytics, this book:

  • Explores the numerous applications for Advanced Analytics and AI in various areas of banking and finance
  • Offers advice on the most effective ways to integrate AI into existing bank ecosystems
  • Suggests alternative and complementary visions for the future of banking, addressing issues like branch transformation, new models of universal banking and ‘debranding’
  • Explains the concept of ‘Open Banking,’ which securely shares information without needing to reveal passwords
  • Addresses the development of leadership relative to AI adoption in the banking industry

AI and the Future of Banking is an informative and up-to-date resource for bank executives and managers, new entrants to the banking industry, financial technology and financial services practitioners and students in postgraduate finance and banking courses.


Acknowledgements xv

About the Author xvi

Introduction xvii

Chapter 1 Prologue: Why Banking? 1

Summary 1

Introduction 2

What is Banking? 4

What Do We Mean by ‘Money’ Today? 7

A Cashless Society Increasingly Emerges 8

Key Banking Functions 10

Future Jobs in Banking 14

Conclusion 17

References 18

Chapter 2 Imperatives in Banking 21

Summary 21

Introduction 21

Strategy and Imperatives 23

Strategy 23

Business Imperatives 24

Current Imperatives in Banking 24

Comparable Imperatives in the Retail Industry 26

Comparable Imperatives in the Telecom Industry 27

Comparable Imperatives in the Healthcare Industry 29

Future Imperatives in Banking 30

Greater Customer Centricity 30

Becoming Truly Digital 31

Completely Accepting Technological Change 33

Reimagining Banking 33

Reinventing Risk Management 35

Conclusion 36

References 37

Chapter 3 Data and Analytics Primer 39

Summary 39

Introduction 39

Data Management and Analytics 42

Data Management 42

The Hierarchy of Analytics 43

‘Next-Generation’ Cognitive Analytics 45

Extracting Value from Data 46

The Importance of Location Analytics 50

Conclusion 51

References 52

Chapter 4 Key Elements of Banking Analytics 55

Summary 55

Introduction 56

Office of Finance Management 56

Performance Management and Integrated Decision Making 58

The Key Elements of Banking Performance Management 59

Customer Analytics 61

Customer Insight 61

Credit Ratings 65

Branch-Specific Campaigns 66

Impact of Social Media Campaigns 67

Relationship Pricing 69

Client Servicing 71

Risk Management 73

Risk Scenario Analytics 74

Fraud Detection 75

Regulatory Compliance 76

Risk Management and AI 76

Operational Efficiency 77

IT Cost Transparency 78

Branch Performance Management 78

Contact Centre Service 80

Payments Monitoring 82

Mortgage Tracking 83

Sales, Compensation and Commission Management 83

Financial Markets Risk and Trade Monitoring 84

Analytics in Portfolio Management 85

Derivative Markets 86

Conclusion 87

References 89

Chapter 5 Machine Learning, AI and ‘Apps’ 93

Summary 93

Introduction 93

Theory and Practice of Machine Learning 95

Apps and Their Usage 96

Data Visualisation 101

Voice Recognition and Voice Assistants 102

Visual and Facial Recognition 104

Thumbprint Recognition 106

Palm Vein Recognition 107

Wealth Management Systems and Apps 107

The Biometric Moral Argument 109

Conclusion 111

References 112

Chapter 6 AI and the Importance of Brand in Banking 115

Summary 115

Introduction 116

Brand Value and Equity in Banking 117

Millennial and Gen Y Brand Expectations from Bank Brands 119

Branding Expectations of Generation Z 120

Branding Expectations of Generation X 121

Branding and Customer Experience Interlocked 123

Branding and Human-Centred Design 124

To Brand or to Debrand? 125

Banks Will Use AI to Become Lifestyle Managers 128

Consumption and Credit Smoothing 128

Conclusion 130

References 130

Chapter 7 AI Leadership and Employee Transformation 133

Summary 133

Introduction 133

Leadership in an AI-Infused Age 136

Augmented Leadership 137

Analytically Infused Leadership 138

A New Approach to Leadership: ‘Trust but Verify’ 140

Attributes of AI-Infused Leaders 141

Leadership Training for the Future 143

‘Digital Future of Banking Requires a New Leadership Model’ 145

Zen and Leadership in Banking 146

Functional Change and Role Transformation 147

The Evolution of the Banking Employee 149

A Banking Employee Persona in 2050 149

Conclusion 151

References 152

Chapter 8 The Bank of the Future 155

Summary 155

Introduction 156

Branch Makeover 156

The Emergence of the Café Bank 159

Millennials Not Happy with Dealing Only with Robots 160

Virtual Reality: Banking and Gaming Converge 161

Universal Banking and Beyond 163

Universal Banking in the United States 164

Banks as the Catalyst for Change: ‘Peer to Peer’ 164

Payment Processes Become More Customer Centric 166

Five Scenarios for the ‘Bank of the Future’ 167

The Full-Service Bank 168

The Digital Bank 169

The Disaggregated Bank 170

The Conversational Bank 173

The Collaborative Bank 174

Transformation of the Investment Bank 175

Conclusion 178

References 179

Chapter 9 Open Banking and Blockchain 183

Summary 183

Introduction 184

Setting the Stage: Open Banking 184

Interlock between AI and Open Banking 186

Blockchain: Setting the Stage 186

Interlock between Blockchain and AI 188

Blockchain in Banking 188

Interbank Market 189

Forex Market 190

Investment Banks and Blockchain 191

Blockchain in Indian Banking 193

Blockchain and Open Banking in Africa 196

Conclusion 199

References 201

Chapter 10 Innovation and Implementation 203

Summary 203

Introduction 203

New Roles and Responsibilities 204

Bootcamps, Hackathons, Innovation Labs, and Other Devices 205

Implementation 207

Innovation or Adaptation? 208

The Use of ‘Design Thinking’ 210

Finding Capital to Innovate: One Example 211

Fintech for Banking 212

Blockages to Innovation 216

Conclusion 218

References 218

Chapter 11 Cybercrime and IT Resilience 221

Summary 221

Introduction 222

Cybercrime in the Context of Operational Risk 224

The Internationalisation of Cybercrime 225

Cyber Security Toolkits 226

Cyber Risk Management Apps 227

Broader Cyber Issues for Banking 227

Safeguarding the Bank of the Future: New Cyber Security Threats 228

Responding to Cyber Attack 230

Cyber Readiness 231

New Cyber Roles, New Cyber Responsibilities 233

AI Fraud Detection in Banking 234

Advanced Analytics in Fraud Detection 235

AI and Anomaly Detection 236

Fraudulent Use of Data 236

Cyber and the Law 238

Conclusion 239

References 239

Chapter 12 Epilogue 243

Appendix: Fintech in Banking 247

Index 271