According to the World Economic Forum and Deloitte report, released today, AI will dramatically upend the traditional dynamics of the financial services system, and this is good news for customers.
“Banks today may have customers who aren’t willing to change banks because of the high costs associated and the effort involved with shifting mortgages,” Deloitte Australia digital partner Joel Lipman said.
“But the future will see these costs removed as AI developments, such as personal banking assistants, are able to identify the best deal for customers and move them without the current high dependency on humans.”
He said this will be the “new battlefield for customer loyalty” as past barriers to switching, like cost, speed and access are eroded.
At the same time, consumers can expect tailored banking solutions, which will also shift the existing dynamics.
“As past methods of differentiation erode, AI presents an opportunity for institutions to escape a 'race to the bottom' in price competition by introducing new ways to distinguish themselves to customers,” the report said.
It pointed to the way Lloyd’s Banking Group in the UK has shifted its position to become a “trusted guardian of data” and said large institutions will increasingly need to know their customers beyond just their finances and look for opportunities to improve their daily lives.
Similarly, AI will deliver customers a “radically reimagined” experience, allowing customers’ finances to run themselves and even act as personal advisers.
The researchers described most financial advice as calculator-based and impersonal. However, institutions like Citi are beginning to connect with consumers through mobile apps giving users a “360-degree view of their financial lives across all banks and providers”, allowing them to consolidate their financial lives, and personal finance apps like Clarity Money and MoneyLion are now using AI to provide mass advice and task automation to help customers refinance loans and consolidate debt.
However, as projects like these and the broader AI development continues, so too will consumer protection measures, the researchers concluded.
“As AI automates decision-making processes, new methods of protecting consumers and ensuring the public interest is sheltered will be required,” the report said.