The transformative potential and challenges of artificial intelligence (AI) in the financial services sector, particularly in the context of Open Banking, were explored by IBM’s Daniel Cascone, financial services sector leader Canada, at Open Banking Expo Canada on June 11.
In a presentation titled ‘The AI Dilemma in Open Banking: Unlocking Value or Just Hype?’ Cascone began by setting the stage with a historical perspective, tracing the evolution of banking from its inception in Italy approximately 850 years ago.
He highlighted how the internet revolution in the early 1990s laid the groundwork for the current technological advancements, setting the stage for the next “paradigm shift” driven by generative AI.
According to an IBM Institute of Business Value (IBV) study, 85% of banking CEOs believe that generative AI will significantly transform the financial services operating model by 2030.
The same study also found that 65% said succeeding with AI will depend more on people’s adoption than the tool or the technology itself, he added.
Cascone delved into the practical implications of AI in banking, starting with the use of chatbots, observing the progression from basic chatbots to sophisticated AI-powered systems capable of maintaining context and providing more accurate responses.
This evolution, he argued, is a testament to AI’s potential to enhance customer experiences and streamline operations in the banking sector.
However, Cascone addressed the challenges that accompany this technological shift, including issues such as data quality, privacy, and bias in AI models.
He emphasized the importance of understanding the provenance and quality of data used in AI systems, particularly in a sensitive field like financial services. He also highlighted concerns about intellectual property and data security, stressing the need for stringent consent and regulatory measures to protect consumer data.
Cascone told delegates to think of Open Banking as a “freeway” that facilitates data movement, while generative AI acts as the “self-driving car”, that’s “going to precisely take you to where you’re going in the fastest, most efficient way possible – that’s where we are”.
In his presentation, Cascone also explored the technology hype cycle, noting that generative AI is currently at the peak of inflated expectations.
Drawing parallels with past technological trends, such as Big Data, cloud computing, and Blockchain, he suggested that generative AI, like its predecessors, will eventually transition into a phase of true value extraction after overcoming initial challenges and disillusionment.
The session highlighted several potential benefits of AI in Open Banking, including hyper-personalization and enhanced fraud detection.
IBM’s Cascone likened AI’s role to that of a personal trainer, capable of understanding and addressing individual financial needs with precision.
He told delegates that in the “generative AI world”, collaboration with industry and the public is required to ensure “we are using it in an ethical way”.
