Until not long ago many people would still show up at a bank branch with a paycheck from their employer, collect the money and leave with a fresh stack of bills, never to be seen between the columns of the gargantuan building until the next payday. They did not see the use case for a bank account, since the mattress or the old chest in the family bedroom will serve as a safe for any remaining savings. Safeguarding deposits was indeed the main function of a bank, along with granting credit and mediating between investments. This all came to an abrupt halt at the beginning of the new century, which saw the most devastating financial crisis since the Great Crash of 1929.
The banks of today, heavily influenced by the crisis of trust triggered in 2008, are redefining their borders thanks to new technologies, big data, and analytics. Here at BBVA Data & Analytics, we are trying to foresee and, at the same time, shape this new era in which banks will help ensure the peace of mind of clients through a more personalized interaction, more transparency, and greater efficiency. This involves trying to adapt to the needs and priorities of a rapidly changing society.
The purpose of the new bank will go well beyond safeguarding deposits, monitoring systemic risk, or being key intermediaries in the global financial system. The bank of tomorrow most likely will not be defined by money, but by the many ways in which assets help us to achieve life goals. Moreover, the bank of tomorrow won’t be defined by today’s interactions with a teller, an asset manager, an ATM, or an app. Those lines will be blurred and will include a strong Artificial Intelligence component that will personalize interactions and will make them ubiquitous, and will not force the client to time-consuming interactions with the service provider, just to meaningful ones in which her desires and goals are the main driver of the financial decisions.
As a customer-centric service, banking will rely on AI to automate financial decision that support the goals of the client. For this understanding the client’s desires, burdens and behaviour is key, and that what advanced analytics is helping to do by leveraging individual and collective data in many fronts. Understanding these dynamics can provide self-driven accounts that predict your needs, smart investments to maximize savings or financial decisions that support values in the future society you believe in. At the same time, this understanding of the complex system the banks are an integral part of, will allow banks to correct and be transparent about fair pricing, bias, risk management and supporting greater goals such as financial inclusion, economic development or the adaptation to climate change.
The bank of the future have to understand that money will be a commodity that won’t be present in the form of bills or coins but as a mean to have new experiences. Because of this, the bank of the future will have to rapidly adapt and find its place in an ecosystem that will have the smart-city as its most important scenery and in which payment interactions will be seamless. Logistic, health, transportation, education will be also driven by AI and will be intermingle with banking in ways are difficult to foresee.
Moreover, the future of work in a AI-driven economy will force banks to propose solutions and ways to support a world where most of the tedious, mechanical work will be done by robots and those life goals could be radically different to the ones we have today.