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5 ways the World Economic Forum says AI is changing banking

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AI will fuel'self-driving finance' The combination of open banking and AI will put customers in a "self-directed mindset" going forward, Galaski said. Those that can provide the most AI-based self-help will have a strong competitive advantage. The ability to tap into both financial and nonfinancial data will be important here, McWaters said. "In exactly the same way that you wouldn't expect an adviser to be able to make good financial decisions for you knowing only the contents of your personal balance sheet, an AI requires an understanding of preferences, locations and behaviors that exist well outside the realm of purely payments and deposits," McWaters said. "So if you want to have recommendations that are truly individualized, that's going to require the input of data from outside of the historical data of traditional financial institutions."


Tech giants like Amazon and Facebook more disruptive to banks than fintech start-ups: WEF

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Banks are faced with more competitive disruption from tech behemoths than financial technology (fintech) start-ups, according to a report by the World Economic Forum (WEF). Contrary to concerns surrounding small fintech firms drawing business away from the financial services sector, the report concluded that start-ups had less of an impact than expected. "Fintechs have changed the basis of competition in financial services, but not the competitive landscape," Rob Galaski, co-author of the report and Canadian lead for financial services at Deloitte, said in a statement Tuesday. "Fintechs now define the tempo and direction of innovation in financial services, but high customer switching costs and the rapid response of incumbents has challenged their ability to scale". Drawing on interviews with finance and tech industry experts, the report found that banks were significantly lagging behind tech giants in the development of technologies like cloud computing, artificial intelligence and big data analytics.


Will AI Disrupt Our Financial Systems?

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Artificial intelligence (AI) is poised to significantly disrupt the global financial services system--creating both new opportunities and increased vulnerabilities--according to a recent August 2018 report, The New Physics of Financial Services: How artificial intelligence is transforming the financial ecosystem, published by the World Economic Forum (WEF) in collaboration with Deloitte. WEF predicts the eventual fall and elimination of mid-sized financial service companies as AI will benefit scale-based players that can compete on cost, and present agile players with new market opportunities in underserved niche segments. According to DBR Research, only 7 percent of banks with assets between $1 billion and $10 billion dollars have deployed an AI solution, a sharp contrast to 48 percent of banks with greater than $50 billion in assets. WEF predicts that early adopters of AI will transform their back-office operations from a cost center to a revenue-generating external service as a cloud-based "software as a service" (SaaS) provider. For example, U.S.-based Blackrock, one of the world's largest asset managers, has developed a hosted proprietary risk-analytics and portfolio management platform called Aladdin that utilizes AI machine learning as a differentiator.


AI Creating Big Winners in Finance - Markets Media

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Artificial intelligence is changing the finance industry, with some early big movers monetizing their investments in back-office AI applications. But as this trend widens, new systemic and security risks may be introduced in the financial system. These are some of the findings of a new World Economic Forum report, The New Physics of Financial Services – How artificial intelligence is transforming the financial ecosystem, prepared in collaboration with Deloitte. "Big financial institutions are taking a page from the AI book of big tech: They develop AI applications and make them available as a'service' through the cloud," said Jesse McWaters, AI in Financial Services Project Lead at the World Economic Forum. "It is turning what were historically cost centres into new source of profitability, and creating a virtuous cycle of self-learning that accelerates their lead."


AI Could Destroy Traditional Banking As We Know It

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Artificial intelligence (AI) is poised to massively disrupt traditional financial services. The World Economic Forum identifies nine ways AI is creating new threats, new opportunities, and new competitive forces for financial institutions. The result may be a marketplace where only the largest and most specialized niche players survive. Subscribe to The Financial Brand via email for FREE!Mid-size and small banks and credit unions could soon find themselves at a serious competitive disadvantage. Ongoing developments in artificial intelligence have the potential to significantly change the way back offices operate and the experiences consumers receive from financial institutions.