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Acknowledgement

I would like to express my special thanks of gratitude to my teacher

HE Shan as well as My colleagues who gave me the golden
opportunity to do this wonderful project on the topic “ARTIFICIAL
INTELLIGENCE AND THE BANK OF TOMORROW”, which also
helped me in doing a lot of Research and i came to know about so
many new things I am really thankful to them.
Contents
I. THE DATA: THE AGITATOR OF THE BANKING ECOSYSTEM.......... 6
II. THE BANKING SECTOR IS ALREADY MARKEDBY NUMEROUS IA
OPPORTUNITIES TO GRAB ............................................................................. 7
III. WHAT EVOLUTIONS FOR THE BANK OF TOMORROW IN Page | 3
FRANCE... .......................................................................................................... 10
….For bank advisors?..................................................................................... 10
…For the customers ....................................................................................... 10
IV. AI IS VULNERABLE TO CYBER ATTACKS, PROTECT IT! ............ 12
V. ARTIFICIAL INTELLIGENCE IS THE SYNONYM OF JOBS
REDUCTION? .................................................................................................... 14
 Page | 4

Abstract

Because of the huge number of organizations that enter to the market

to compete with the banks by providing many innovative services as
online payment mobile payment…Banks start losing their market
share, so they start to include some new services using AI. In this
paper we will talk about the benefits of this technology for the bank
advisor and the customer who will benefit from better service in less
time. We will also talk about how this AI will not make bank advisors
fired from their jobs
 INTRODUCTION

At a time when the smartphone is sovereign and disrupts the models

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of interaction with the customer (bank card, wallet, advisor), where
the fintech and giants of the web (Amazon Alexa, Paypal, Applepay
...) come to play the role of intermediary between the customer and its
traditional bank, banks must stay in the course against this tidal wave
historical. Supporting figures, tech start-ups and fintech could indeed
aspire up to 25% of market shares to traditional banks by 2020.
For the bank, the control of its data and its Artificial Intelligence
appears as an essential condition to adapt to this changing world. In
short, do not give their activities one by one to the new technological
players, but on the contrary, remain master of its technology and
exploit it - in a fair and healthy way - to widen the competitive
advantage. Today, the conditions do not seem yet reunited for a
success of the banks
I. THE DATA: THE AGITATOR OF THE
BANKING ECOSYSTEM

Under the impetus of regulatory constraints, banks are historically rich Page | 6
players with their data: the ability to exploit data in favour of
operational efficiency or customer experience has thus become a major
challenge in taking share of market. Historical banks are now facing
several types of actors taking advantage of data and artificial
intelligence:
FROM ONE SIDE...THE FINTECHS...
They take the position of broker of the customer relationship for new
services such as aggregators (Bankin 'etc.), budget tools or brokerage
... They offer innovative banking services, simpler and tailor-made,
possibly in partnership with traditional banks (savings with Yomoni or
AtomBank, life insurance with Advize or FundShop ...).
ON THE OTHER HAND,THE GAFAMI, AND MORE
GENERALLY THE GIANTS OF THE WEB
They nibble for several years, slowly but surely, the strongholds of
banking services. Their positioning gives them the advantage of
offering innovative services through the exploitation of their own
customer data, and via their technological assets (control of Artificial
Intelligence, devices, customization of offers etc.).
The intelligent personal assistants, Amazon Alexa and Google Home
besides, could pre-empt little by little the customer interface. The
account consultations and bank transfers can now be performed by
these interface IAs. You need just to say "Alexa, I want to make a
money transfer". Through these technologies of voice recognition &
understanding of natural language, customer knowledge is thus
captured by the giants of the web, who will be better able to offer
services that meet the needs of users ... to the detriment of traditional
banks.
 Page | 7

In the near future, new players in open banking will benefit from
market opening thanks to the European DSP2 law and the provision of
banking information. Secure communication channels will enable the
provision of account information, the provision of API by traditional
banks is planned for September 2019. Just like the recent
transformations of the energy world, European reflections tend
therefore to intensify the competition of the financial services and the
emergence of new business models via the exploitation. of the data.

II. THE BANKING SECTOR IS ALREADY

MARKEDBY NUMEROUS IA
OPPORTUNITIES TO GRAB
To meet the new expectations of customers, the historical banks have
turned to 100% digital activities to move towards lower costs and a
simplified customer relationship (digital spin-off type INGDirect,
Boursorama, Fortuneo, HelloBank! ...). But if this digitization has
progressed in recent years, the use of artificial intelligence is now
decisive to maintain the lead in performance and customer relationship
In 2017, the France is AI report [5] listed the multiple potential uses of Page | 8
AI in financial services: customer relationship center management,
predictive analytics, chatbots, etc. The use of Artificial Intelligence
tools in this sector indeed concerns very diverse applications and covers
a great variety of functions, which can be divided into three strategic
axes:
Operational efficiency, to assist business teams on more or less
complex tasks and increase productivity: preparation of customer
appointments, fraud detection, predictive analysis of customer
behavior, etc.
Customer relationship, to ensure immediate, personalized and 24h / 24h
answers: Dynamic FAQ, actions in place of the client, help in making
appointments, etc.
Business development, to promote cross-selling / up-selling, reduce
churn or attrition rate: categorization of customer emails with pre-
identification of commercial actions to be carried out, recommendation
systems (suggestions for a customer, contact opportunities)
Banks are now turning in particular towards use cases related to the
improvement of operational efficiency, with high added value. These
use cases often rely on relatively simple technologies such as RPA -
Robotic Process Automation - and increasingly on more sophisticated
systems such as NLG - Natural Language Generation. For example,
companies like Yseop [6] implement in a few months use cases around
the generation of smart texts, to help bank advisers prepare their
customer interviews in particular. In the Bank Customer Relationship
Centers, the AI provides support for micro-tasks, to facilitate access to
knowledge bases, or support simple customer conversations. The AI
offers here a non-negligible time saving.
According to the report Artificial Intelligence and Labor France
Strategy, in terms of customer banking relationship the tools of AI that
deal with the regulatory part are among the most elaborate: detection
of fraudulent behavior, credit risk rating, etc. Cognitive systems allow
for example to analyse masses of tera- (or even peta-) bytes data to Page | 9
identify abnormal behaviours without having been previously
imagined. These applications concern the entire banking network
(branches, internet, mobile), markets (companies, individual, private
bank) and associated payment ways.
Finally, one of the key topics related to customer relationship and
artificial intelligence remains ... the ChatBot. These conversation
interfaces provide faster and more direct access to customer services.
Available 24/24, they are able to answer, via preprogrammed texts, to
several hundred or even thousands of questions, and to perform actions
in the place of the customer. Although they are changing the customer
banking relationship today, their true transformation potential lies in
the more "innovative" uses, already in production abroad for some:
personalized recommendations on investment optimization, support for
prevention and risk modeling, help with product subscription,
recognition of emotions, etc.
III. WHAT EVOLUTIONS FOR THE BANK OF
TOMORROW IN FRANCE...
….For bank advisors?
For advisors, who represent one in five employees in the banking Page | 10
sector, the cognitive involves a reorganization of work and skills
required. Responses to simple client requests will always be more
automated, while of course reserving complex cases to human advisors.
By relieving advisors of a number of time-consuming tasks, their time
devoted to commercial activities will increase (prospecting,
recommendations on investment solutions, etc.), making it possible to
contribute more to the development of the activity. This will require
banks to focus on training in negotiation, optimization of financial
investments or interpersonal communication.
In terms of organization, the contribution of the IA may lead to a
specialization of advisers, dealing exclusively with specific and
complex requests transferred by the AI. Cognitive systems will also be
able to optimize waiting time and quality of service for a client,
depending on the availability of advisors, their areas of expertise, the
customer satisfaction they generated by the past, etc.
Finally, the AI can assist the advisers in their decision-making, by
studying the financial products that they could propose to their
customers, according to specific financial situations.
…For the customers
Examples of the application of Artificial Intelligence devices to cover
the current needs of customers are flourishing abroad. It is therefore
natural to consider them in the near future in France. The
implementation of AI-based tools has multiple benefits for customers,
including getting more personalized advice rather than a product
resulting from gross segmentation.
In the end, the generalization of the 24-hour Customer Banking Service
is also likely to lead to the emergence of low-cost services. Banks could
require the customer to pay to contact a human advisor, giving access
only to a virtualized Customer Service.
AI PERSONETICS TECHNOLOGIES SERVING BANKS
AND THEIR CUSTOMERS
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At the end of 2017, the Royal Bank of Canada set up the platform of
AI NOMI, intended to offer personalized financial coaching via
predictive analysis. Based on the "Personetics" technology, the
solution covers a wide range of functionalities: optimization of
savings according to the customer's consumption habits, notification
during unusual transactions, anticipation of relevant account
movements and proposals, etc. For the bank, NOMI is a way to
leverage business opportunities, while bringing more value to
customers. The finding is the same at Digibank - the Asian mobile
bank of DBS Bank - which uses the ChatBot KAI to cover similar
features. Since its launch last September, the enthusiasm generated
by KAI among others has convinced 1.8 million new customers.
IV. AI IS VULNERABLE TO CYBER ATTACKS,
PROTECT IT!
The algorithms of the banking world deal with ever more sensitive data
and tend to be part of key processes for the company. It is therefore Page | 12
essential to ensure that these systems cannot be compromised, as such
a compromise would have operational, financial and regulatory
consequences, and damage the image of the bank. What would the
customers of a bank deemed not to master its digital transformation and
innovations, if not flee? What would a customer do if their chatbot
interlocutor provided detailed information about another customer?
Remember indeed the shock wave related to Tay. Tay was an artificial
intelligence connected to Twitter: she was learning tweets from the
community to become a real tweeter. Tay passed, in just one night,
from an ordinary teenager's profile to that of a racist and homophobic
person. Small ocean tsunami of cognitive assistants ...

The reason? Users of the 4chan forum sent him thousands of dubious
messages, which Tay understood in all innocence. Some will say that
Tay's drama is comparable to that of a child with great potential but
who has received an abject education. AI can be considered a
formidable weapon if a malicious process interferes with its learning
dynamic.
In this regard, four main types of threats against AI are the news:
The poisoning, like Tay, where the attacker tries to manipulate the
system by injecting malicious data during the learning phase.
The escape, where the attacker manipulates the input data to deceive
the AI during the prediction phase
Inference, where the attacker understands the model governing the AI
to know how to divert it (example: the Iphone X is unlocked using a Page | 13
mask)
Theft of data, where the attacker manages to get his hands on the model
generated by the system and its behavior, which allows it to grab
unplanned data or even to deduce the data used during learning
To make the AI system more robust, the minimum-security measures
remain fairly simple, such as moderation and filtering of input or output
data from the system. There is also a need to focus on securing the
infrastructures that support these systems (Smart Lab platforms,
production systems, etc.) and protecting the data that pass through
them, especially if SaaS services are used. These initial measures will
be supplemented by risk analyses and intrusion tests to ensure that
security needs are met.
Specific measures make the compromise of the system even more
complex, such as defensive distillation (combination of two systems
making the model more robust) or masking gradient, or even adversial
examples (data created specifically to defeat the model), to harden
model and make future compromise attempts more complex.
Finally, monitoring must be backed up, particularly on the search for
attempts to modify the input data, or drift of the model during the use
phase, etc.
V. ARTIFICIAL INTELLIGENCE IS THE
SYNONYM OF JOBS REDUCTION?
By drastically reducing management costs by automating low value-
added tasks, while improving customer satisfaction and risk Page | 14
management, AI solutions become essential. The replacement of the
activities of human operators is then undeniable, as illustrated by the
gradual shift of contact (physical) to digital contact. It is therefore
natural to wonder about the future employment of employees of the
bank. Are we converging on a drastic reduction in the number of posts,
in favor of Artificial Intelligence?
AI FIRST OR HUMAN FIRST?
It is first necessary to remember that AI cannot exist without a human
operator. Although it is synonymous with breaking current practices,
its degree of maturity is still low and a complete replacement of human
activities by AI remains in the realm of science fiction. In addition, new
regulations, such as the GDPR of May 25, 2018, reinforce the
regulation of uses and thus limit their potential.
In the coming years, the AI may allow the advisor to free up time to
better deal with complex topics where his "empathy" and "abstraction
ability" will be key. Relieved of repetitive tasks of analysis of
supporting documents, assisted in the detection of fraudulent
transactions, benefiting from automatic and real-time reports on their
perimeters, the collaborators will naturally focus on the tasks with
higher added value. For example, the IA will refocus the advisor on
structuring advisory and decision-making tasks: less administrative
management and data analysis, more customer support, thanks to the
support of artificial intelligence solutions.
This is for example the challenge that is embracing the post office by
marrying the digital and proximity of 100,000 factors with the French:
a mixed model where historical assets, in this case human, are
reinvented thanks to the AI rather than replaced.
From a customer perspective, we are betting on the growing need to be
able to deal with "real advisers" on complex needs. I do not necessarily
want my bank advisor to make a transfer ... but I wish he could really
spend time on my real estate purchase projects. The 100% AI will not
necessarily be a good strategic choice! After the buzz effect on the AI, Page | 15
organizations that succeed will be those that will combine the power of
AI and the richness of human proximity.
AI IS A SYNONYM OF EMPLOYMENT OR MUTATION
DISAPPEARANCE?
AI will be a vector of change and not of job loss if and only if the
players in the banking world do not turn their backs on this trend. The Page | 16
previous technological revolution has shown that many industrially
dynamic countries (high employment rate of workers and technicians
in particular) are the countries that have been at the forefront of
robotization (Germany, Japan, Korea ...) and not those who have turned
their backs. In concrete terms, these countries have observed a decrease
in the number of jobs per unit production chain ... but a multiplication
of factories and production chains in these countries, now in total a
significant employment.
The necessary skills and typologies of jobs will evolve very gradually
in two dimensions: technical skills (data-science) and human skills
(proximity and customer relationship). But this will not happen without
a deep support of employees ... and this for all categories of jobs.
TO THE CONSTRUCTION OF A WINNING-WINNING
RELATIONSHIP
Banks to accompany their employees to make them work in perfect
cooperation with these new technologies. This support will be win-win:
the employee will have fewer daunting tasks while allowing the bank
to increase its profitability.
To do this, training plans and skills upgrading advisers have long been
on the agenda of US banks, to enable them to understand the benefits
of these solutions and possible man / machine synergies. One of the key
objectives is to make operational employees realize that the AI
advances made by the company do not mean a decline in activity, but
rather an opportunity to focus only on activities with high added value.
An interesting approach envisioned by some mutualist groups is to
validate only the uses-cases explicitly approved by the collaborators.
 CONCLUSION
And if we look a little more on the cases of uses back-office reputed
less noble for the business and the data scientists, but sources of fast
and first-rate gains (automation and signalling of the efforts of Page | 17
compliance, scoring / filtering upstream of credit applications, fraud
detection ...)?
And if we structure ourselves to be able to really master the
construction, learning and life of AI algorithms consistent with the
realities, capacities and skills of complex banking IS (and their
evolution)?
"Developing a model of AI is not complicated ... to make it fall
sustainably into a complex IS."
And if we finally managed to find simple and adapted answers to the
thorny questions of Management, Quality and Data Governance ... by
making tangible the shortfalls in real use cases rather than choosing
a priori magic tools for outsource the problem.
And if the next Vivatech could demonstrate how you have visibly
improved the customer / collaborator experience or boosted your
performance through AI core business ... rather than a fireworks
startups - although often brilliant - but we have sometimes find it hard
to understand how they contribute to your differentiators of
tomorrow?