AI, Big Tech and the cloud will damage the banking industry if not embraced – Citibank

Citibank’s global head of bank research Ronit Ghose kicked off this year’s EMEA Media Summit by highlighting how artificial intelligence, Big Tech and core banking systems on the cloud will disrupt financial services, according to finextra.com.

Reiterating the importance of perceiving data as an asset, as former chairman of Citicorp Walter B. Wriston surmised, Ghose said that “the banking industry must react and evolve to not get wiped out by an extinction event such as digital disruption.”

He went on to compare banks to black and white television sets and suggested that financial institutions are operating with old yet resilient structures that can lead to outages, although less frequent than those experienced by fintech disruptors.

Banks must respond to this risk of damage by leveraging what Ghose describes as the “ABCs of digital disruption in finance” but stated that the introduction of new technology will not mean that the number of jobs will decrease.

He drew parallels between what happened when ATMs were introduced and the fear that permeated around the potential loss of jobs of bank tellers but revealed that the number of those in this role actually went up in the US at the time.

It is evident that while the number of jobs within the industry may decrease, more opportunities are being created in the broader financial system. Alongside this, with Big Tech and the rise of platform companies, “they’re doing what banks struggle to do: operate across multiple products and have a laser-like focus on the client.”

Ghose used KakaoBank as an example to demonstrate the impact Big Tech is making on services in the emerging markets and suggested that the way that this Korean bank was able to onboard one million clients in a week shows how powerful these new players can be and in turn, possibly disrupt the banking infrastructure that currently exists in Asia.

On the subject of core banking and the cloud, Stuart Riley, global head of technology and operations, Citi markets and securities services, said that this technology “in itself provides a new paradigm that enables other things to be possible.”

Expanding on this point, Riley continued to discuss how with cloud computing, processes that would have taken weeks or even months, can now be completed in less than an hour and because of the widespread and free availability of advanced analytics libraries, organisations now have unprecedented access to computing power to manage data.

He added that now that computers can visualise, „we’re able to do things that we could not do in the past and run more efficiently to deliver services to customers in a way that banks were not able to before”.

Supporting Riley’s statement and advocating blockchain’s potential effect on banks, Steven Holzer, global head of digital strategy, said that “historically problems have not been prioritised and blockchain has functioned as a catalyst to bring attention to these issues”.

Holzer said that Citibank have found 50 use cases in different stages of maturity for blockchain and although in nascent stages of development, the subject of blockchain has become more of a talking point when discussing the democratisation of data and has led to a shift in the bank’s client base with more having data science roles.