The Bank of the Future:

How AI will power

ubiquitous services &
personalised customer
experiences.
| Overview

Ubiquitous banking is the next

frontier in the digital financial
revolution.

In our ever-connected digital world, there is

tremendous opportunity for banks to reach new
markets and build exceptional experiences that
delight customers. The bar on customer service is
higher than ever and will only continue to rise, with
a proliferation of new experiences, services and
organizations re-imagining customer interactions.

New cloud-based technology makes service

innovation more affordable, intuitive and resource
light, allowing banks to take their brands and
services to a new level, becoming even more
competitive and truly customer centric.

New regulation such as PSD2 has opened the

door to technology and partners across sectors
that can help banks build richer, stickier value
propositions and drive life-cycle value.

The Bank of the Future | 2

Looking ahead, we are entering But what will it take to become truly
pervasive?
a new world of free-flowing and
ubiquitous banking. One where How can banks harness tech-innovation
invisible, hyper-intelligent platforms to deliver enhanced customer experiences
make their customers’ everyday and engagement, reduce business risk
financial lives more predictive, and achieve more efficient allocation of
seamless and personalized by resources? This paper explores banks’
embedding financial services into journey towards customer inclusivity and
empowerment leveraging data and AI.
their daily interactions.
It reveals what it takes to build an
Banks must evolve rapidly to take
AI enabled “Bank of the Future” and
advantage of this new market opportunity.
provides insights to help banks turn their
ubiquitous banking vision into reality.
New composable technology together
with Artificial Intelligence (AI) and analytics
will play a central role in unlocking and
supporting this next stage in bank evolution.
They will help The Bank of the Future
drive significant growth opportunities by
tapping into their customers’ daily desire for
speed, convenience and instant access to
information, services and goods.

Welcome to the ubiquitous Bank of the Future...

You wake up During your At work... You get

in the morning, morning an anniversary home after
unlock your commute... reminder for a long day...
phone... your robo-
tomorrow
and find a meal
pops up and
your train ticket concierge on your doorstep,
automatically
is automatically automatically just in time for
orders your
purchased and rebalances dinner.
you’re informed partner’s
your investment
about the best favourite
portfolio and sends
route to the flowers.
you a WhatsApp
station.
update.

The Bank of the Future | 3

Introduction:
Drivers and disruptors.
Over the past few years, banks have faced unprecedented and
continuous change. Accelerated shifts in consumer behaviour,
financial markets, technology and legislation are rocking service
models and reshaping strategies and investment roadmaps.

01 Evolving consumer demands

Users want always-on, real time and personalized
digital and mobile-first customer experiences.

02 Increasing Competition
The rise of new fintechs, digital banks and
non-traditional players in financial services
There are which is “unbundling” the banking value
four key chain (e.g. Apple, Alibaba).
drivers for
change:

03 Technology revolution
Commoditization and enhanced access
of key tech elements (e.g., core banking,
cloud) leading to lower entry barriers and
leaner cost structures.

04 Changing regulation
Introduction of open banking and PSD2 mandates
driving disintermediation of financial services, with
emergence of new regulations and frameworks in
some jurisdictions for fintechs and digital banks.

The Bank of the Future | 4

Disruptive forces. They are countering challengers
and disruptors by:
The key difference between the
market now and twenty years ago is that • Launching their own
incumbent banks are no longer the ‘go digital attackers.
to’ for those seeking to utilise, move or e.g. ABN Amro with new10,
manage their money. Instead, consumers Goldman Sachs with Marcus.
and businesses are increasingly
choosing fintechs, neobanks and retail • Investing in new
brands to facilitate everyday transactions. technology upgrades.
While incumbent bank growth slows, e.g. DBS Singapore’s multi-year
for others it’s ramping up. For example, digital transformation programme.
German-based neobank N26 now has
7+ million customers across 25 markets. • Re-imagining their
Alibaba’s Yu’e Bao offering manages propositions and
$150+ billion in assets, primarily excess products for customers.
cash held on Alipay digital wallets. And e.g. UniCredit’s buddybank,
in the US, Starbucks in-app mobile a mobile-first 24/7 concierge-
payments is now the top proximity based bank.
payment method with 20+ million
users per year.
Market implications.

How are banks responding? Delivering great customer experiences

is what matters most and is the key
Increasing choice and diversity is to growth. A McKinsey survey of US
raising the bar on quality of products, retail banking customers confirmed
services and user experiences. It has that banks with the highest degree of
forced incumbent banks into a reported customer satisfaction grew
‘catch-up’ scenario. deposits 84% faster than banks with
the lowest satisfaction ratings1.

It’s clearly no longer enough to provide

the most compelling product or service.
To win, banks have to deliver them
faster and more seamlessly, minimizing
touchpoints, speeding up turnaround
time, and reducing reliance on
manual handoffs.

1. “Reimagining customer engagement for the AI bank of the future,”

McKinsey & Company, October 2020 https://www.mckinsey.com/
industries/financial-services/our-insights/reimagining-customer-en-
gagement-for-the-ai-bank-of-the-future

The Bank of the Future | 5

AI will help drive
the revolution.
With advancements in AI, machine
learning and analytics, banks can
tap into diverse customer and
transactional data sets right on their
doorstep. The Bank of the Future
can use this to redefine customer
experiences and aspire to create
a “segment of one”. Taking on the role of the individual’s
personal management team, it will
seamlessly blend services into their
daily life. For example, as the CFO who
AI technologies could manages your money and investments,
potentially deliver up to the COO that helps you manage

$1 trillion
cumbersome administrative tasks, and
the Concierge that curates and makes
possible memorable moments for you
and your family.
of additional value
2 Sounds far-fetched? Not when you
each year . McKinsey consider that Netflix already uses AI
and machine learning extensively to
personalize movie watch lists and
viewing schedules. Or that Amazon uses
AI in its Alexa voice-activated devices
and recommendation engines; and in its
computer vision systems to track items in
warehouses and estimate demand and
inventory planning.

Banks are already leveraging AI and

analytics in areas such as fraud and risk
management. But there is still significant
room to expand this into other areas
to tap into new revenue potential and
reimagine the user experience.

The Bank of the Future | 6

Here are three reasons why this
is relevant for banks:

01
Volume of data.
Banks have access to one of the largest volumes
of customer data of any industry. For instance,
they process about a billion credit card
transactions every day. Fig 1 shows how the
Financial Services sector’s customer scale and
data volumes far exceed that of almost
every other industry.
03
Automation and efficiency.
Accenture estimates that 7-10% of tasks
in financial services could be automated by
2025, while 43-48% could be augmented
with technology. In North America alone,
the resulting cost savings and productivity
gains could deliver between $87 billion and
$140 billions of cumulative value3.

02
Personalization and value creation.
For global banking, McKinsey estimates that
AI technologies could potentially deliver up
to $1 trillion of additional value each year2. In
addition, enterprise value of companies that
deliver greater personalization to customers has
multiplied 10-15 times over the last 10 years.

Fig 1: Data volume and usage potential by sector.

Source: Deloitte

Number of
customers

Technology Financial Services

Healthcare
Automotive Retail

Transportation Telecommunications
Volume of data/customer & logistics

Industrial Construction Agribusiness Education

2. “The executive’s AI playbook,” McKinsey & Company, https://www. 3. “Workforce 2025: Financial Services skills and roles,” Accenture,
mckinsey.com/business-functions/mckinsey-analytics/our-insights/ December 2019, https://www.accenture.com/us-en/insights/finan-
the-executives-ai-playbook?page=industries/banking/ cial-services/workforce-2025-skills-roles-future

The Bank of the Future | 7

Key components of the
Bank of the Future.
The need and desire are clearly
there, but what else do banks
need to take their services to
the next level?

There are many factors that will have

to evolve if banks want to become the
people’s champion for better money
and banking services. These include The three building blocks that will
more than digital transformation but also enable the “Bank of the Future”
a shift in mindsets, strategic approach
and how technology platforms are
deployed. Many will already have begun
this change process on their path to
digital transformation. 01
Customer-centric strategy
built around user needs
(external facing).

02
Value-based AI use cases
for core bank functions
(internal facing).

03
Flexible, composable
technology architecture.

The Bank of the Future | 8

01
Customer-centric strategy.
Innovation should always start with
the customer. Banks’ perspective has
to switch from products (i.e. credit card
or personal loan) to customers’ needs
(e.g. I need a line of credit, or I want to
purchase X). To do this, they must ‘walk’
their user journeys ‘in the customer’s
shoes’. That involves designing services
from the ground up and recognising
User persona: Sam, 29, CEO of an early-stage start-up
It’s morning
Sam must go to work
A fast, efficient trip
Bank linked services can:
• Book taxi automatically based
on his calendar.
• Pre-order breakfast/coffee to
collect en route.
• Deliver summary of
personalized news/stock
updates.
Personalize
AI is used to analyse calendar and
behavioural patterns to customize all
aspects of the morning commute.
that different customer personas have
different needs, both within and outside
traditional banking services. Once the
customer needs and journey have been
crystallized, AI can be leveraged and
embedded along the end to end journey
for a range of use cases to address
customer needs and deliver a seamless,
personalized experience.
It’s lunch time It’s evening
Sam must order food Sam goes to the gym
Needs
Healthy, quick and Work out and be
convenient meal rewarded for effort
Potential AI use cases
Bank linked services can: Bank linked services can:
• Order food based on his diet • Offer cheaper insurance if he
preferences, weather and hits his regular workout goals.
available time.
• Provide transferable loyalty
• Find and book a nearby rewards that he can use in
table, that fits with his and his the gym.
colleagues’ preferences, if Sam
has a working lunch.
Objective
Predict Enrich
How
AI reviews spending habits and AI identifies relevant
learns personal preferences to partners to exchange data with
predict user needs. and enhance daily life via synergetic
ecosystems.
The Bank of the Future | 9
02
Value-based AI use cases.

The Bank of the Future’s day-to-day

machinery and everyday business and
support functions have to be equipped
to enable best-in-class customer
journeys powered by AI and analytics.
Risk Management
Areas such as Risk, Compliance and
Operations need to use data intelligently
to add value to the customer by
automating, speeding up or eliminating
unnecessary processes and activities. According to PwC, fraud costs
nearly $42 billion. In a Federal
Use cases should be anchored on Reserve SME survey, almost
business value (revenue growth, cost 50% of dissatisfied loan
saving or risk reduction) and customer applicants said their biggest
value (customer experience or time to painpoint was long waits for
market) and must tangibly deliver on credit decisions.
clearly defined customer needs.

How AI can drive value across key

bank functions: Advanced transaction
and fraud monitoring
Identify suspicious activities in real
time, compared to traditional 3-level
suspicious activity reviews which
take days to detect.

Pre-emptively flag transactions

outside of usual geography of
usage, transaction limits or any
other abnormal behaviour.

Automated credit decisioning

Use extensive automation and new
sources of data (including location
data, telecom usage, utility bills,
and more) to generate prompt
credit decisions.

The Bank of the Future | 10

 Compliance
A typical mid-sized Bank
has to submit almost 50-60
compliance reports annually.
Regulatory requirements are
unlikely to reduce going forward,
especially as release frequency
of new products rises.
Automated KYC checks
Leverage image recognition to
automatically scan information from
official physical documents and verify
them (with human-like judgement).
Automated Indexing of
unstructured data
Support data mapping requirements
for privacy regulations like GDPR and
CCPA using unsupervised learning.
Real time reporting
of transactions
Support increasing frequency of
transaction reporting in certain
tax jurisdictions enabling both tax
authorities and banks to conduct
analytics in real time to pre-empt
AML/CTF risks.
Operations
Banks today still analyse
thousands of documents
manually on a daily basis.
Additionally, customer
assistance call wait times can
often run into hours, creating
a significantly degraded
user experience.
Analysis of documents and
extraction of important data
points and clauses
Use NLP to conduct analysis on
thousands of commercial agreements
in seconds, dramatically reducing the
time spent on back-end processes
(e.g., Google Cloud’s DocAI solution).
Intelligent virtual assistant
& customer support
Use predictive analytics and
cognitive messaging to provide
financial guidance and solve complex
customer queries, dramatically
improving turnaround times.
The Bank of the Future | 11
03
Flexible, composable technology architecture.
Flexible, composable architecture frees
banks from the shackles of vendor lock
ins and static technology. As a result, it
allows true “plug and play” of different
components to respond to changing
customer needs, market dynamics or
technology trends. Banks will need to
Composable Architecture
Cloud-native core banking platform
with real time data collection
According to McKinsey, real-time reconciliation and
24/7 transaction processing will be a key competitive
advantage for financial institutions to enable speed
and flexibility in customer relationships4. A cloud-
native core banking platform can enable this through
real-time data processing and reconciliation from sub
ledgers, while also curating application and partner
ecosystems to quickly adapt to new market trends
and customer needs.
Third party ecosystems
Composable architecture enables
curation of a best of breed ecosystem
that bring in additional capabilities
from outside the organization through
APIs and webhooks. This allows banks
to tap into the ‘latest and greatest’
technology solutions to complement
services and supplement existing data
sources with new external data sets
and enhanced intelligence.
Hyper-parameterized
product configuration
Composable architecture provides the ability to
customize products for individual customers to
create a “segment of one”. Everything from interest
rates and loan tenures to instalments and payment
terms can all be tailored to the individual customer
profile. By tapping into data across the technology
ecosystem, banks can understand customer needs
in greater depth and roll out hyper personalized
offerings more regularly and at greater speed. API
connectivity between the core banking platform
and other back, middle and front office applications
at banks can enable product parameterization in
real time for each user, transforming banking into
a ‘Netflix-like’ experience.
process and analyse data in real time
for AI and analytics applications and
will require best in class technology
solutions to do this.
Modern day composable architecture
is comprised of five key pillars:
01
02 Configurable cloud-based
tech stack
Using cloud infrastructure, banks can
easily swap individual pieces of their
technology stack in and out, based on
evolving customer needs and market
03 conditions. It achieves cost savings,
increased automation and greater
resilience, by removing the need for
large armies of people to manage
cumbersome on-premises technology.
04 A single source of truth
AI and analytics use cases will require
a consolidated pool of clean, accurate
and compliant data in a data lake, to
act as a single source of truth. As banks
mature, they will also have to put in place
05 relevant committees and principles to
govern data use, integrity and ethics
as AI and analytics applications grow
in scale and complexity. According to
Google, AI has significant potential to
promote innovation and empowerment,
but this technology may also raise
important ethical challenges which
need to be addressed thoughtfully
and proactively by organizations5.
4. “Building the AI bank of the future,” McKinsey & Company, May 2021, https://www.
mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/build-
ing%20the%20ai%20bank%20of%20the%20future/building-the-ai-bank-of-the-future.pdf
5. “Artificial Intelligence at Google: Our Principles,” Google AI, https://ai.google/principles/
The Bank of the Future | 12
 How AI can be applied
in a bank’s technology
ecosystem.
Example

Customers make payments Channels and segment-of-one products enhance user experience

Payments are creating transaction

events for the stream.

Stream of Transactions

Monitors Searches for Creates Journals

Transactions Patterns in Real-Time Uses customer segments
Components
Ecosystem

Behavioral AI
AML Models Core Product Factory Channels

Creates Adapts to
Picks suspicious Creates customer
personalized, customer
AI or fraudulent segments using
segment-of-one preferences and
transactions AI
products behaviours

Middle Office Back Office Front Office

The Bank of the Future | 13

Conclusion and
recommendations.
The world that banks were
originally created to serve no
longer exists.
Banks used to be built to last - today they
need to be built for change. They must
evolve constantly, rapidly and without
fear, if they wish to remain relevant to
modern consumers and their lifestyles.
To transform into an AI enabled Bank
of the Future, incumbents will have to
equip themselves with new technologies,
strategies and mindsets in order to
deliver highly personalised, embedded
financial experiences.
1. Understand
Take time to identify your
target customer personas
and understand their needs.
Develop those that are most
relevant to your business, using
as much granularity as possible on
age, occupation, motivations, etc.
Map out individual customer
journeys and relevant needs using
inputs from interviews, focus groups
and market research.
Three steps to make the Bank of the Future a reality
Being customer-centric is no
longer an ambition in the digital
world – it is a prerequisite
for success.
With modern composable core banking
platforms, artificial intelligence and
advanced analytics, there is no reason
why banks cannot deliver exciting new
immersive use cases.
To realize this journey and ensure
operations and resources are
strategically aligned, we recommend
the following actions:
3. Invest
Define target architecture and
identify/assess key systems
2. Prioritize (e.g., core banking) for flexibility,
resilience, integration and data
Focus on use cases that offer collection capabilities.
the most value to you and the
customer. Assess current data collection
and processing capabilities
Prioritize based on: including how data is stored,
structured and governed.
1. Value at stake (e.g.
customer satisfaction,
incremental revenue). Identify potential solutions in
2. Ease of implementation the market to address technology
and feasibility. gaps or areas of upgrade, including
considerations on whether to
build, buy or partner.
Identify key points where AI or
analytics can be applied to enhance
or strengthen the users’ journey.
Select one or two pilots/MVPs to
demonstrate quick wins, to test-
and-learn, and scale incrementally
over time.
The Bank of the Future | 14
What next?
Building the AI enabled Bank of the Future
will be an incremental and iterative process.
One that will require bold decisions on
business, technology and operating models
and end goals that continue to reshape and
reframe over time. As AI adoption grows
across financial services and other industries,
banks will also need to be prepared to deal
with enhanced scrutiny and regulation that
comes with this technology, which will serve
to reinforce trust-based relationships with
customers, governments and civil society6.

It is also a path that many banks may find

difficult to navigate on their own. Banks will
need to tap into both internal and external
capabilities, and welcome the right partners
onto their teams, with the relevant experience
and capabilities to ensure they can become
the ubiquitous brands of tomorrow.

6. Google has developed a framework of recommendations for regu-

lating AI and has provided input to multiple government consulta-
tions: https://ai.google/static/documents/recommendations-for-reg-
ulating-ai.pdf

The Bank of the Future | 15

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