In June 1967, the world's first “Automated Teller Machine” or “ATM” was introduced revealed at a branch of Barclays Bank in north London in a grand ceremony.
The very first system looked a bit of different to what we all know and use today. But nearly six a long time later, it's hard to assume a world during which people could only withdraw money during bank opening hours.
Now banks in Australia and around the globe are betting big on a brand new sort of automation that may transform their business model: artificial intelligence (AI).
On Monday, Bendigo Bank announced It had signed a multi-year cope with Google to make use of the tech giant's Gemini Enterprise AI platform to assist with a variety of tasks, including evaluating loan applications and detecting fraud.
It follows a significant deal between the Commonwealth Bank and OpenAI, announced in Augustto “make advanced AI available to customers and employees.”
What does the longer term of banking seem like – and who’s answerable for risk management?
Some big changes have already occurred
Banks have been quietly using AI tools to assist with a variety of tasks for a few years. If you may have recently interacted with a chatbot, you may have probably studied AI.
AI is currently helping Banks and employees make decisions. It is being searched Fraud and FraudAssessing creditworthiness, supporting trading and investment activities, and completing routine, time-consuming tasks.
Your banking app's warning a few shady transaction? Most likely AI. Suspecting that the caller claiming to be out of your bank is perhaps a scammer? Probably AI again.
At the Commonwealth Bank alone, AI tools have reportedly helped Cut customer fraud losses in half And Reducing waiting times in the decision center by 40%.
The banks making this accusation aren’t just Australians. For example, the US investment bank JPMorgan has developed its own company own proprietary AI platformLLM Suite, which has reportedly been rolled out across all business units to support employees in a wide range of tasks.
Kelly Barnes/AAP
What's next?
A Current report A study on AI adoption by market research firm Evident Insights found that around 85% of banks' current use of generative AI is internal fairly than customer-facing.
But the following wave of AI adoption could possibly be fundamentally different. Instead of just helping people work faster, technology could possibly be trusted to make decisions and take actions by itself.
This is known as “agentic AI.” While just some banks – just like the Bank of New York Mellon – tested it, The first results are promising.
Youngest Research Consulting firm McKinsey presented the case study of a giant global bank that arrange ten “teams” of AI agents to process latest customer applications from start to complete.
These AI agents checked government registries, verified identities, checked for sanctions, and generated reports. Only in exceptional cases did people step in.
The productivity gains? According to McKinseyWhile easy AI automation could make a team 15 to twenty% faster, full AI control could theoretically increase performance by 200 to 2,000%.
Hard lessons
Australian banks are betting big on this future. But additionally they learn painful lessons concerning the human cost. In July, 45 Commonwealth Bank call center staff were told they’d do that lost their jobs after introducing an AI chatbot.
The bank then admitted the case in August after a dispute was raised by the Finance Sector Union might have been handled higher and reversed the job cuts in query.
Despite the bank's backtracking, Matt Comyn, chief executive of the Commonwealth Bank, later said told a technology festival in October where there’s a “urgent need” to benefit from AI. He said leaders have to take the initiative, even after they are tempted to take a seat back and follow.
What does this all mean for the longer term of banking?
The financial services industry continues to experiment with the most effective uses of AI.
One option is to develop AI-powered financial coaches that proactively notify customers personalized savings suggestions.
Another item under investigation includes “autonomous finance“Systems that may manage your money with minimal effort and streamline every little thing from bill payments to investment allocation.
This signifies that AI systems could handle entire banking processes independently within the near future. Imagine applying for a loan at 2 a.m. and getting approved five minutes later, with AI caring for every step.
What concerning the risks?
The public expects banks to make use of fair, explainable and secure AI systems. But technology is advancing so quickly that regulators are doing it strive to maintain up.
There are particular concerns about algorithmic bias. If AI learns from historical data that reflects past discrimination, it could perpetuate and even reinforce unfair lending practices.
This could, for instance, have a negative impact on the borrowing capability of those that have been considered a “bad investment” previously.
The banks themselves are answerable for any errors within the AI. There could be no accountability outsourced to algorithms. However, customers are still prone to feel the brunt of those errors.
Banking is being fundamentally rewritten by AI, whether we’re ready for it or not. That could mean cheaper, faster and more personalized banking.
But it also puts jobs in danger, raises privacy concerns, and concentrates enormous power in algorithms that the majority of us don't understand.
As politicians increase pressure on banks, the true test will not be whether AI can transform banking. It's about whether this transformation will likely be fair and not only concerning the bottom line.
