Welcome to the era of AI-enabled banking

by Régis Roba - Private Sector Belgium Business Unit Director
| minute read

Did you know that banks are under threat? Traditional banking institutions are increasingly caught between the demands of their customers and mounting competition, particularly from Big Tech giants such as Google and Meta. How are traditional banks dealing with that growing threat? Perhaps unsurprisingly, they are investing even more in emerging technologies such as artificial intelligence (AI).

This is just one of the insights from Sopra Steria’s annual Digital Banking Experience Report, which is based on research commissioned by Sopra Steria and carried out by Forrester and Ipsos. Forrester surveyed 866 senior decision-makers from banks across the globe on their future -readiness, while Ipsos asked 11,300 bank customers in 9 European countries about their financial habits and attitudes toward their banks.

Trust: not to be taken for granted

One of the key conclusions of this year’s report is that traditional banks must move quickly to avoid losing both trust and market share. Trust is the lynchpin of the banking industry, and this year’s data reveals that 80% of consumers still trust their banks. However, this can no longer be taken for granted, as more than half of customers (51%) state that they feel their bank isn’t interested in earning them money, and more than a quarter (27%) indicate that their bank’s products don’t meet their needs.

Worse still, almost half of bank customers (47%) say they would be interested in opening an account with players like Amazon, Apple, Facebook (Meta), Google or Microsoft. This figure isn’t lost on traditional banks, with 36% acknowledging these brands as “the greatest threat to our business”.

An AI-powered future

Traditional banks are responding by investing heavily in emerging technologies, with one in three banks (35%) reporting that they plan to maintain their existing level of investment. Almost half (45%) are planning to increase their investment in advanced technologies such as chatbots, augmented/virtual reality (AR/VR) and AI-enabled digital assistants.

AI stands out as a cornerstone of banking strategy for the future, providing a key mechanism for analysing their growing customer data sets. Effective analysis can result in a high level of personalisation to meet today’s customer demands, while improving efficiency by boosting internal processes. The ultimate goal is not for AI to replace staff but to usher in the era of the augmented advisor, which provides bank employees with greater insights with which to better advise their customers.

AI risks and rewards

AI is helping traditional banks to meet their customers’ expectations and drive efficiency. So, it should come as no surprise that almost half of the bank decision-makers (47%) said they are planning to integrate generative AI or large language models (LLM) into their business, while close to half (45%) will also invest in AI-enabled automation and workflow optimisation.

But the AI revolution in banking brings its own challenges. Bankers are justifiably concerned about the increased cybersecurity risk, as today’s criminals leverage AI-powered algorithms to identify security weaknesses and mount ever more sophisticated attacks. With this in mind, it comes as no surprise that 37% of bankers fear that technology will put their companies at greater risk of cyber attacks. Finally, one in three (30%) also worry that technological advances will negatively impact banking sector jobs.

Want to learn more? Download our full Digital Banking Experience Report 2023.