‘AI is evolutionary not disruptive’: Banks discuss the AI impact at Money20/20
Photo taken by Kieran O'Connor

Artificial intelligence (AI) is a hot topic in all walks of life. The emerging technology has taken the world by storm, from creating realistic sounding songs of famous artists to improving analytical capabilities in sponsorships.

Every industry has felt the impact of AI, whether that be good or bad, and the payments sector is perhaps one of the industries which has felt this impact the most, whilst also playing a prominent role in its use and development.

During the first day of Money20/20, AI took centre stage in nine discussions. Perhaps the most notable was ‘Europe’s Biggest Banks Discuss AI and the Future of Technology’, as Gina Clarke, Europe Content Director of Money20/20, quizzed Marnix van Stiphout, Chief Technology Officer of AI at ING and Joanne Hannaford CIO and CPO of the Corporate Bank at Deutsche Bank.

“Frictionless banking is what it’s all about.”

Marnix van Stiphout

With the technology being used for good and bad, van Stiphout made his intentions clear at the start of the show, as he says: “I don’t want to sound facetious, but we need to do something really sensible. I’m not saying we’ve been unsensible or reckless with it , but we can do a lot better.

“We are going to be focusing on what our customers need and how we apply it at ING, frictionless banking is what it’s all about.”

However, Hannaford explains that as good as it is to have these overarching goals, there are still a lot of restrictions in the way of achieving them.

AI and Generative AI (Gen AI) are unlike technology that banks have used in the past. Hannaford, originally a computer scientist, tells the audience that this technology requires data and not just code.

She adds: “When you talk about access to information, it’s difficult in the context of financial services, because we have responsibilities. So, the amount of risk you can take in those decisions is limited.”

In the panel’s view, institutions like Deutsche Bank understand this importance, and various banks have been pursuing collaborative efforts. In fact, Hannaford explains that Deutsche Bank has agreed with a handful of other banks to provide anonymized data.

This unity in the sector, marks a historical change. Banks are beginning to realise that they have to work together at this stage of AI’s development to produce beneficial uses of the technology and fight against those that are using it for illicit purposes.

Just as van Stiphout highlighted the goal of frictionless banking, he also tells the packed-out conference hall that one of the main uses of AI is to fight fraud. A notable sector which has seen the effects of this extensively is the music industry.

Stakeholders in this sector are constantly, like payments, debating if it is a blessing or curse. As mentioned earlier, people can now use AI to deepfake songs by famous artists, allowing them to add their own lyrics.

Deepfakes have not gone unnoticed in finance. European ID and fraud prevention solution provider Signicat revealed the growing threat of AI to identity fraud in a report and how key decision makers are experiencing more of these emerging attacks, with some believing that they are unprepared to tackle.

“You can’t have AI in banks that don’t have humans in the loop.”

Joanne Hannaford

Additionally, some banks are talking about using AI to help with other aspects, including KYC and allowing the technology to alleviate the manual burden of staff at banks. The latter idea around use, is one that worries the majority of the general public.

Not only does this concept threaten jobs, but many feel as though it is a step towards a dystopian, anti-social society. However, Hannaford puts these worries to bed.

She tells the crowd: “You can’t have AI in banks that don’t have humans in the loop, the regulator’s will not allow that, so you don’t get an unconstrained AI.”

Although the event is in Amsterdam, moderator Clarke points out a question sent in by a member of the audience, which asks how European banks feel about the risk taken by US counterparts.

van Stiphout takes the question head on, as he says: “I take the view that we need to be at the forefront of AI. We don’t need to take a backseat.”

Offering some American experience, Hannaford explains: “I spent 25 years in a large American bank and I can see technology is a core competency. They see technology as an intrinsic part of the way that you can actually access businesses.

“I think that it’s a dangerous place for a company not to have AI as a core discussion.”

Alongside global competition, the panel recognises fintech’s important part to play when it comes to AI.

“I remember when fintech was first described and there was a sense that fintech companies would be very disruptive to major institutions, they’ll potentially even be able to take significant market share. And in fact, that actually hasn’t materialised,” Hannaford adds.

“I think the biggest thing we need to realise is that financial services don’t have the best track record of introducing innovation seamlessly.”

“It’s a dangerous place for a company not to have AI as a core discussion.”

Joanne Hannaford

She goes on to say that banks must welcome partnerships with fintechs in order to evolve and not be scared about competition. This sentiment is shared by van Stiphout, as he raises again the more important threats are cyber security and fraud, which he believes fintechs can help with.

Concluding the discussion, Hannaford and van Stiphout recognise the important roles of initiatives, such as Deutsche Bank’s Centre of Excellence for AI, which has allowed Hannaford, van Stiphout and other big European banks to realise that AI is “evolutionary as opposed to disruptive.”