Welcome to the era of AI-enabled banking

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

It may not seem like it, but banks are under threat. Or at least traditional banks are increasingly caught between the demands of their customers and mounting competition, in particular from Big Tech giants such as Google and Facebook. How do traditional banks deal with that growing threat? Perhaps unsurprisingly, they invest even more in emerging technologies such as artificial intelligence (AI).

The release of Sopra Steria’s Digital Banking Experience Report has become somewhat of an annual tradition. This year, the report 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 nine European countries about their financial habits and their 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 a full 80% of consumers still trust their banks. However, this can no longer be taken for granted, with more than half of customers (51%) stating that they feel their bank isn’t interested in earning them money, and more than a quarter (27%) indicating 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 Big Tech players such as Amazon, Apple, Facebook (Meta), Google or Microsoft. This threat isn’t lost on traditional banks, with 36% acknowledging these tech players as “the greatest threat to our business”.

AI-powered future

Traditional banks are responding by investing heavily in emerging technologies, with one in three banks (35%) reporting that they will 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, acting as a key mechanism for the analysis of customer data, which is growing exponentially. This kind of analysis is crucial to providing a high level of personalisation of today’s customer demands, and also to 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, providing bank employees with greater insight so that they can 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%) are planning to integrate generative AI or large language models (LLM) into their business, while close to half (45%) are also planning to invest in AI-enabled automation and workflow optimisation.

But the AI revolution in banking brings with it its own challenges. Bankers are justifiably concerned about the increased cybersecurity risk, with today’s criminals leveraging 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 cyberattacks. Finally, one in three (30%) also worries that technological advances will have a negative impact on banking sector jobs.

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