AI and the Future of Banking

Acknowledgements xv About the Author xvi Introduction xvii Chapter 1 Prologue: Why Banking? 1 Summary 1 Introduction 2 What is Banking? 4 What Do We Mean by 'Money' Today? 7 A Cashless Society Increasingly Emerges 8 Key Banking Functions 10 Future Jobs in Banking 14 Conclusion 17 References 18 Chapter 2 Imperatives in Banking 21 Summary 21 Introduction 21 Strategy and Imperatives 23 Strategy 23 Business Imperatives 24 Current Imperatives in Banking 24 Comparable Imperatives in the Retail Industry 26 Comparable Imperatives in the Telecom Industry 27 Comparable Imperatives in the Healthcare Industry 29 Future Imperatives in Banking 30 Greater Customer Centricity 30 Becoming Truly Digital 31 Completely Accepting Technological Change 33 Reimagining Banking 33 Reinventing Risk Management 35 Conclusion 36 References 37 Chapter 3 Data and Analytics Primer 39 Summary 39 Introduction 39 Data Management and Analytics 42 Data Management 42 The Hierarchy of Analytics 43 'Next-Generation' Cognitive Analytics 45 Extracting Value from Data 46 The Importance of Location Analytics 50 Conclusion 51 References 52 Chapter 4 Key Elements of Banking Analytics 55 Summary 55 Introduction 56 Office of Finance Management 56 Performance Management and Integrated Decision Making 58 The Key Elements of Banking Performance Management 59 Customer Analytics 61 Customer Insight 61 Credit Ratings 65 Branch-Specific Campaigns 66 Impact of Social Media Campaigns 67 Relationship Pricing 69 Client Servicing 71 Risk Management 73 Risk Scenario Analytics 74 Fraud Detection 75 Regulatory Compliance 76 Risk Management and AI 76 Operational Efficiency 77 IT Cost Transparency 78 Branch Performance Management 78 Contact Centre Service 80 Payments Monitoring 82 Mortgage Tracking 83 Sales, Compensation and Commission Management 83 Financial Markets Risk and Trade Monitoring 84 Analytics in Portfolio Management 85 Derivative Markets 86 Conclusion 87 References 89 Chapter 5 Machine Learning, AI and 'Apps' 93 Summary 93 Introduction 93 Theory and Practice of Machine Learning 95 Apps and Their Usage 96 Data Visualisation 101 Voice Recognition and Voice Assistants 102 Visual and Facial Recognition 104 Thumbprint Recognition 106 Palm Vein Recognition 107 Wealth Management Systems and Apps 107 The Biometric Moral Argument 109 Conclusion 111 References 112 Chapter 6 AI and the Importance of Brand in Banking 115 Summary 115 Introduction 116 Brand Value and Equity in Banking 117 Millennial and Gen Y Brand Expectations from Bank Brands 119 Branding Expectations of Generation Z 120 Branding Expectations of Generation X 121 Branding and Customer Experience Interlocked 123 Branding and Human-Centred Design 124 To Brand or to Debrand? 125 Banks Will Use AI to Become Lifestyle Managers 128 Consumption and Credit Smoothing 128 Conclusion 130 References 130 Chapter 7 AI Leadership and Employee Transformation 133 Summary 133 Introduction 133 Leadership in an AI-Infused Age 136 Augmented Leadership 137 Analytically Infused Leadership 138 A New Approach to Leadership: 'Trust but Verify' 140 Attributes of AI-Infused Leaders 141 Leadership Training for the Future 143 'Digital Future of Banking Requires a New Leadership Model' 145 Zen and Leadership in Banking 146 Functional Change and Role Transformation 147 The Evolution of the Banking Employee 149 A Banking Employee Persona in 2050 149 Conclusion 151 References 152 Chapter 8 The Bank of the Future 155 Summary 155 Introduction 156 Branch Makeover 156 The Emergence of the Cafe Bank 159 Millennials Not Happy with Dealing Only with Robots 160 Virtual Reality: Banking and Gaming Converge 161 Universal Banking and Beyond 163 Universal Banking in the United States 164 Banks as the Catalyst for Change: 'Peer to Peer' 164 Payment Processes Become More Customer Centric 166 Five Scenarios for the 'Bank of the Future' 167 The Full-Service Bank 168 The Digital Bank 169 The Disaggregated Bank 170 The Conversational Bank 173 The Collaborative Bank 174 Transformation of the Investment Bank 175 Conclusion 178 References 179 Chapter 9 Open Banking and Blockchain 183 Summary 183 Introduction 184 Setting the Stage: Open Banking 184 Interlock between AI and Open Banking 186 Blockchain: Setting the Stage 186 Interlock between Blockchain and AI 188 Blockchain in Banking 188 Interbank Market 189 Forex Market 190 Investment Banks and Blockchain 191 Blockchain in Indian Banking 193 Blockchain and Open Banking in Africa 196 Conclusion 199 References 201 Chapter 10 Innovation and Implementation 203 Summary 203 Introduction 203 New Roles and Responsibilities 204 Bootcamps, Hackathons, Innovation Labs, and Other Devices 205 Implementation 207 Innovation or Adaptation? 208 The Use of 'Design Thinking' 210 Finding Capital to Innovate: One Example 211 Fintech for Banking 212 Blockages to Innovation 216 Conclusion 218 References 218 Chapter 11 Cybercrime and IT Resilience 221 Summary 221 Introduction 222 Cybercrime in the Context of Operational Risk 224 The Internationalisation of Cybercrime 225 Cyber Security Toolkits 226 Cyber Risk Management Apps 227 Broader Cyber Issues for Banking 227 Safeguarding the Bank of the Future: New Cyber Security Threats 228 Responding to Cyber Attack 230 Cyber Readiness 231 New Cyber Roles, New Cyber Responsibilities 233 AI Fraud Detection in Banking 234 Advanced Analytics in Fraud Detection 235 AI and Anomaly Detection 236 Fraudulent Use of Data 236 Cyber and the Law 238 Conclusion 239 References 239 Chapter 12 Epilogue 243 Appendix: Fintech in Banking 247 Index 271