Where are the customers’ bots? The AI paradigm shift in retail banking

Financial institutions are already using artificial intelligence (AI) to cut costs and deliver new services. Robo-advisers, chatbots and ‘copbots’ auto-detecting fraudulent transactions are increasingly common. These uses are undoubtedly valuable, but the business model is still the consumers being sold a financial product by a bank, whether by a call centre agent or a robot that impersonates a mortgage vendor. The big change in financial services will come when customers use AI to assess offers from financial institutions for themselves. They will have access to AI as powerful as the banks have, because Google, Facebook, Apple and Amazon (and companies like them) will be giving it to them. And this will mean individuals will not be the customers: their bots will be. Since most retail financial services offer products that just service a need at a point in time (eg paying for parking) rather than create an extraordinary user experience or are too complicated for normal people to make informed decisions about (eg pensions), we might expect most consumers to abdicate in favour of intelligent agents operating under the new duty of care umbrella. This has been a subject of futurist speculation for some time, but the rapid growth of ChatGPT and its ilk means that banks now have an urgent need to develop strategies to take advantage of this significant change in the nature of the financial services in the mass market. This paper looks at the imminent confluence of open finance and AI to consider the consequences of giving bots access to consumers’ cash (through open banking, for example). This will mean a world of smart wallets, capable of making decisions on behalf of consumers. They will be capable of deciding what services to use, who to get them from and how to maximise their financial well-being, leaving their users to spend more time on human activities.