AI and the Future of Banking

Description

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 2020, 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 recognised 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. AI and the Future of Banking Contents Acknowledgements About the Author Introduction 1 Prologue: Why Banking? Summary Introduction What Is Banking? What Do We Mean by ‘Money’ Today? A Cashless Society Increasingly Emerges Key Banking Functions Future Jobs in Banking Conclusion References 2 Imperatives in Banking Summary Introduction Strategy and Imperatives Strategy Business Imperatives Current Imperatives in Banking Comparable Imperatives in the Retail Industry Comparable Imperatives in the Telecoms Industry Comparable Imperatives in the Healthcare Industry Future Imperatives in Banking Greater Customer Centricity Becoming Truly Digital Completely Accepting Technological Change Reimagining Banking Reinventing Risk Management Conclusion References 3 Data and Analytics Primer Summary Introduction Data Management and Analytics Data Management The Hierarchy of Analytics ‘Next-Generation’ Cognitive Analytics Extracting Value from Data The Importance of Location Analytics Conclusion References 4 Key Elements of Banking Analytics Summary Introduction Office of Finance Management Performance Management and Integrated Decision Making The Key Elements of Banking Performance Management Customer Analytics Customer Insight Credit Ratings Branch-Specific Campaigns Impact of Social Media Campaigns Relationship Pricing Client Servicing Risk Management Risk Scenario Analytics Fraud Detection Regulatory Compliance Risk Management and AI Operational Efficiency IT Cost Transparency Branch Performance Management Contact Centre Service Payments Monitoring Mortgage Tracking Sales, Compensation and Commission Management Financial Markets Risk and Trade Monitoring Analytics in Portfolio Management Derivative Markets Conclusion References 5 Machine Learning, AI and ‘Apps’ Summary Introduction Theory and Practice of Machine Learning Apps and Their Usage Data Visualisation Voice Recognition and Voice Assistants Visual and Facial Recognition Thumbprint Recognition Palm Vein Recognition Wealth Management Systems and Apps The Biometric Moral Argument Conclusion References 6 AI and the Importance of Brand in Banking Summary Introduction Brand Value and Equity in Banking Millennial and Gen Y Brand Expectations from Bank Brands Branding Expectations of Generation Z Branding Expectations of Generation X Branding and Customer Experience Interlocked Branding and Human-Centred Design To Brand or to Debrand? Banks Will Use AI to Become Lifestyle Managers Consumption and Credit Smoothing Conclusion References 7 AI Leadership and Employee Transformation Summary Introduction Leadership in an AI-Infused Age Augmented Leadership Analytically Infused Leadership A New Approach to Leadership: ‘Trust but Verify’ Attributes of AI-Infused Leaders Leadership Training for the Future ‘Digital Future of Banking Requires a New Leadership Model’ Zen and Leadership in Banking Functional Change and Role Transformation The Evolution of the Banking Employee A Banking Employee Persona in 2050 Conclusion References 8 The Bank of the Future Summary Introduction Branch Makeover The Emergence of the Café Bank Millennials Not Happy with Dealing Only with Robots Virtual Reality: Banking and Gaming Converge Universal Banking and Beyond Universal Banking in the United States Banks as the Catalyst for Change: ‘Peer to Peer’ Payment Processes Become More Customer Centric Five Scenarios for the ‘Bank of the Future’ The Full-Service Bank The Digital Bank The Disaggregated Bank The Conversational Bank The Collaborative Bank Transformation of the Investment Bank Conclusion References 9 Open Banking and Blockchain Summary Introduction Setting the Stage: Open Banking Interlock between AI and Open Banking Blockchain: Setting the Stage Interlock between Blockchain and AI Blockchain in Banking Interbank Market Forex Market Investment Banks and Blockchain Blockchain in Indian Banking Blockchain and Open Banking in Africa Conclusion References 10 Innovation and Implementation Summary Introduction New Roles and Responsibilities Bootcamps, Hackathons, Innovation Labs, and Other Devices Implementation Innovation or Adaptation? The Use of ‘Design Thinking’ Finding Capital to Innovate: One Example Fintech for Banking Blockages to Innovation Conclusion References 11 Cybercrime and IT Resilience Summary Introduction Cybercrime in the Context of Operational Risk The Internationalisation of Cybercrime Cyber Security Toolkits Cyber Risk Management Apps Broader Cyber Issues for Banking Safeguarding the Bank of the Future: New Cyber Security Threats Responding to Cyber Attack Cyber Readiness New Cyber Roles, New Cyber Responsibilities AI Fraud Detection in Banking Advanced Analytics in Fraud Detection AI and Anomaly Detection Fraudulent Use of Data Cyber and the Law Conclusion References 12 Epilogue Appendix: Fintech in Banking Index