No other technology is currently changing so many areas of life as artificial intelligence (AI). AI applications such as music streaming, smart home devices or voice assistants on cell phones are already an integral part of our everyday lives. But AI is not stopping at banking either: in addition to some challenges, it holds the opportunity to make banking even easier and more intuitive for (corporate) customers.
The origins of artificial intelligence
Artificial intelligence is defined as the ability of a system to correctly interpret external data, learn from that data, and use those insights to achieve specific goals and tasks through flexible adaptation[1]. Machine learning is a subfield of AI and helps systems perform tasks better over time.
Although AI has rapidly gained importance in our perception, especially in recent years, its beginnings date back to the middle of the last century. With his "Turing machine," mathematician Alan Turing proved in 1936 that machines could process algorithms, laying the theoretical foundation for what we know today as AI. In 1965, the term artificial intelligence was used for the first time by the two mathematicians Marvin Minsky and John McCarthy. This was followed by a steady further development of the technology in various areas of application until, at the beginning of the 2010s, it finally found its way into the everyday lives of millions of people through the voice assistants of major technology companies. Today, AI can be applied and further developed in more and more fields thanks to increasing computing performance.
AI is shaping the banking of tomorrow
But how will AI affect the banking processes and products? Customers' expectations of their bank have shifted significantly in recent years: The focus is on topics such as a coherent customer experience on all channels, transparency and social responsibility, and cost-effective products and offerings. According to a study by the management consulting firm Capgemini, however, banks do not prioritise these points as highly as their customers do. This "gap" has grown even wider during the Corona pandemic. To remain relevant in their customers' lives, banks should therefore focus on so-called "banking-as-a-service" (BaaS) solutions. In these solutions, classic banking products are seamlessly integrated into customers' everyday lives, such as instant credit at the checkout, or digital payment services like Google Pay or Apple Pay. The bank does not play a visible role but uses a platform to offer its product in a meaningful way.
However, to offer BaaS solutions, banks need a stable digital infrastructure. This is where AI comes into play. With certain processes, applications, and features, such as data analysis, cloud applications, etc., banks can offer their products in a "platform-compatible" manner.
How ING is using AI to make banking safer and easier
ING has been developing and testing AI-based applications for some time, both in retail and corporate banking. To meet our customers' expectations for banking to be as instant, personal, relevant, and seamless as possible, ING has developed a machine-learning-based credit analysis model for its retail and SME customers that complies with guidelines such as PSD2 to make automated lending decisions. In corporate banking, the application of AI is still at the very beginning. Nevertheless, ING has developed a first, promising tool for front-office employees to make the processes in the background even simpler and thus enable faster and more personalized services. The application structures large amounts of data, making it easier for our employees to access. With this internal search engine called Holmes they can easily find and further use documents such as rating reports, financial analyses, or credit documentation, simply by performing a keyword search.
However, talking about AI, it’s important to be aware that attitudes towards data and privacy are changing as well. Customers trust their bank to keep their personal information as safe as their money. When developing AI-based applications, banks must keep in mind that they have a duty and responsibility to safeguard this data, protect the customers privacy and ensure systems and online environment are secure.
The examples show that AI-based applications are not always directly visible, but they have an enormous impact on the experience of both bank customers and employees. Above all, banks must have a strategic idea of how the different applications can work together to ensure a particularly smooth and (partially) automated process. In the future, individual applications will be even more closely integrated into an overall application network, which will control banking processes. Only with solid IT infrastructure banks are well prepared for future challenges and can meet the demands of their customers in retail and corporate banking.
[1] *Haenlein and Kaplan, “A brief history of artificial intelligence: On the past, present, and future of artificial intelligence”, 2019, p. 1.