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AI Set to Transform Open Banking Landscape? Not Without Fintechs!

  • Many banks are not, at present, ready to implement open banking
  • However, the vast majority recognize open banking's value
  • A new report reveals that three-quarters of all banks are ready to implement open banking

The amount of banks are not operationally ready to participate in and implement open banking is as high at 75%, according to the latest Digital Banking Experience (DBX) report released by Sopra Steria and Sopra Banking Software, and as reported by The Fintech Times.

And, while many banks may not yet be ready for open banking, a hearty 74% recognize the potential of collaboration.

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52% of banks globally, and 60% of US banks specifically, also see AI as offering them a "highly-critical" revenue steam.

AI is a Vital Tool

Whether they are implementing AI already or merely aspire to in the near future, Banks see AI tools as critical for generating revenue through open banking.

Although a majority of banks don't feel ready for open banking, they clearly recognize its benefits. In the US, 53% of banks see improved data insights, as well as approved data sharing, through open banking services as a significant stream of revenue.

Banks recognize the revenue potential of open banking through improved data insights and sharing, which 74% of global banks and 66% of US banks see as "crucial" to their futures.

Eric Bierry, CEO of Sopra Banking Software, explained: “The urgency for digitisation in the banking industry has been deafening for years. With AI now at the helm, that call is even stronger than ever.

“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 personalisation by becoming their trusted financial advisors.”

The New Frontier?

Clearly, banks see collaboration with fintechs as crucial, enabled by data sharing via open banking. The numbers are, to say the least, very convincing:

The survey of over 850 senior decision makers at global banks, as well as a joint survey with Ipsos of over 11,000 global bank customers, also found that while consumers want convenient, hyper-personalised advice from banks to help them manage their finances, 40 per cent say they haven’t received it.

In fact, only 27% of consumers believe that their bank offers them services suited to their personal financial situations, and 19% say that the level of personalization a bank provides can cause them to change banks altogether.

Overall, 62% of US banks believe that AI will have the most significant impact on customer service. As banks increasingly turn to AI to better engage with consumers, 64% plan to expand their investments in AI-enabled chatbots and digital assistants – compared to 45% of banks globally.

Artificial Intelligence and Fintechs

As we've noted before, collaboration with fintechs is crucial for digital transformation. As pointed out by

Indeed, Tom Priore, CEO of Priority Technology Holdings, highlighted the evolving dynamic between banks and FinTechs, noting a trend of “co-opetition” and collaboration. This trend sees banks partnering with FinTech startups to leverage their specialized solutions, thereby enhancing their existing offerings, which include lending, checking and deposit accounts, and cards.

 Artificial Intelligence meets Fintech.

Dave Scola, CEO, U.S. at Form3 goes on to say that "The need to have banks work well with each other — and with FinTechs — is driving a need for greater […] technical integration. So that’s why you’re seeing the rise of APIs.” These APIs are the main method in which artificial intelligence powered technologies from Fintechs are integrated into banks and their core systems, from customer experience to automation of processes like check processing.

As banks continue the path towards digitization, they must also understand the importance of AI technologies and recognize fintech partners that can help them achieve customer satisfaction and other goals.

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