AI Revolutionizing Open Banking Landscape: 74% of Banks Acknowledge Collaboration Potential
In the fast-evolving realm of open banking, a staggering 75 per cent of banks find themselves unprepared to fully embrace its potential, as unveiled by the recent ‘Digital Banking Experience’ (DBX) report from Sopra Steria and Sopra Banking Software, according to The Fintech Times. Authored by Tom Bleach and released on May 3, 2024, this report delves into the transformative power of AI and the shifting dynamics catalyzed by emerging regulatory frameworks.
The report, a collaborative effort with global research giants Forrester and Ipsos, underscores how artificial intelligence is becoming instrumental in shaping banks’ strategies in the open banking arena. Notably, 52 per cent of banks worldwide, and 60 per cent in the US, identify AI as a pivotal revenue stream.
Despite notable strides in digital transformation, with 58 per cent of banks claiming top-tier digital maturity, mere migration from legacy systems might not suffice to match the industry’s pace of innovation. However, the recognition of open banking’s benefits is resounding, with 53 per cent of US banks eyeing enhanced data insights and improved data sharing as significant revenue streams.
Crucially, the report emphasizes the pivotal role of collaboration, with 74 per cent of global banks and 66 per cent of US banks deeming it essential for their future endeavors. This collaboration, fueled by enhanced data-sharing capabilities mandated by new regulations, promises to foster symbiotic relationships between traditional banks and fintech firms, propelling innovation and consumer-centric product development.
Eric Bierry, CEO of Sopra Banking Software, echoes this sentiment, emphasizing AI’s role in reshaping banking paradigms: «Open banking is one of the main areas where banks are looking to AI to streamline processes and create new opportunities for collaboration – but it doesn’t stop there. AI also enables banks to adhere to consumers’ growing need for personalization by becoming their trusted financial advisors.»
Yet, amidst these advancements, consumer sentiments present a nuanced narrative. While traditional banks still enjoy majority trust, a significant portion of consumers feel underserved, with 51 per cent believing banks lack interest in enhancing their financial well-being. Herein lies an opportunity for banks to leverage AI as a conduit for hyper-personalized financial advice, a sentiment echoed by 62 per cent of US banks envisioning AI’s profound impact on financial planning.
The report underscores the chasm between consumer expectations and delivered services, with only 27 per cent feeling their bank caters to their financial needs. As banks pivot towards AI-powered engagement strategies, investments in AI-enabled chatbots and digital assistants are slated to surge, signaling a shift towards more personalized customer interactions.
As the banking landscape traverses uncharted territories, AI emerges as the cornerstone driving innovation, collaboration, and consumer-centricity. With the potential to bridge the gap between consumer expectations and banking services, AI heralds a new era of banking, redefined by agility, personalization, and trust.