Without the internal ability to integrate new solutions, the benefits are unlikely to reach expectant customers, many of whom are now used to daily interactions with AI across the customer services landscape.

So, how can financial institutions bridge the gap, jumping from slow, hurdle-ridden processes to seamless workflows and satisfied consumers? The key is in the infrastructure.

A legacy tech nightmare

Legacy technology is a fundamental barrier to innovation. Unfortunately, in an industry where data privacy and consistent service availability must be a priority, it’s understandable for institutions to be wary of significant change to their organisation’s core. This is reflected in the statistics, with a study from April of this year revealing that the majority (70%) of banking IT budgets are being spent on sustaining outdated systems.

On top of draining financial resources, employees have found themselves overwhelmed by ongoing technical challenges and a lack of efficient workflows. Across departments, this includes the difficulty to retrieve siloed data when required for tasks and reports, or to drive improved customer experiences. In recent years, this has been exacerbated by the prominence of IT outages and the growing sophistication of hackers, continually highlighting weak points within a bank’s infrastructure. 

With every industry actively searching to recruit top tech talent, and the AI skill gap frequently making headlines, the objectives of weaving AI into business processes while maintaining outdated legacy technology are unlikely to run happily in parallel to one another.

AI in banking

The capabilities of AI are changing every industry. Talking to a chatbot on an e-commerce website, personalised recommendation of shows, and advanced protection from spam emails are all examples of AI’s use in our everyday lives. This was reflected in a recent survey where, now that companies are embracing AI, 61% of consumers admitted that they now anticipate a more personalised service.

The world of banking is no different. The average consumer wants simplicity and predictability, especially when it comes to their finances. Through the integration of AI, customers can receive personalised product recommendations, offers when they may be considering leaving, or have queries answered by a chatbot outside of working hours. These elements, that used to be a nice-to-have, are becoming a necessary offering for banks focused on maintaining loyalty among their customer base.

The requirement for far-reaching change has been demonstrated by top financial institutions, with cross-industry collaborations increasingly appearing between tech companies and leading banks. From NatWest’s partnership with OpenAI, which cited customer experience as a significant reason behind the initiative, to Barclay’s intent to give 100,000 workers access to Microsoft’s AI tool, there’s evident pressure to enhance workflows, AI-literacy, and enthusiasm among the workforce.

The competitive landscape is changing, with AI as the driver. Customers are increasingly expecting user-friendly budgeting help, better protection from cyber-criminals, and product recommendations aligned with their needs. However, without a tech stack able to be flexible and easily integrate new solutions, organisations will continually find themselves falling behind. To embrace the capabilities of AI tools, both those available now and those still being invented, a long-term commitment to modernising internal infrastructure is critical.

The benefits of coreless banking

To gain the necessary interoperability, help businesses to future-proof innovation, and align with changing pressures and expectations, the adoption of a coreless banking model is essential.

For the Banking Industry Architecture Network (BIAN), a not-for-profit standards body, 2019 saw the introduction of the Coreless Banking concept. The goal was to provide an adaptable and resilient foundation for an unpredictable future of advancements and changing legislative requirements. To this end, a coreless model enables the introduction of several components, which can be added or swapped easily to establish a framework grounded in APIs and open standards.

IT infrastructure in payments

In a world where customers’ expectations are moulded by their interactions with AI, the integration of technology will continue to grow in importance for financial institutions. From driving hyper-personalisation to scalability, the key to modernisation sits in the foundation and, with most banks concluding that a slow shift towards it had lost them new customers, the need for change is evident.

To gain maximum value from investments in technology, organisations need to commit to a long-term programme of innovation, impacting operations, service delivery, and the customer journey. This will be achieved through building an ecosystem on open standards and APIs, enabling the swift adoption of AI tools.