By Jack Mendel
The increasing levels of automation in private banking reflects a need to move into the digital age, but it also brings with it challenges.
City A.M. sat down with specialist Mark Bruce, chief executive of of Britannia Financial Group to find out how intelligent automation and artificial intelligence is impacting the sector.
Mark, why don’t we start by trying contextualise the use of AI in banking for our readers who may not be aware of how far the industry has come in recent years. What is it and how does it work?
Intelligent automation has quietly, but nonetheless irreversibly, become a mainstay in financial services.
From JPMorgan using bots to respond to internal IT requests, including resetting employee passwords, to Barclays introducing robotics process automation (RPA) across a range of processes, such as accounts receivable and fraudulent account closure – a wave of automation has emerged which redefined the way our industry operates.
What does this mean for private banking in particular?
Ultimately, the extent to which institutions embrace automation reflects their commitment to remaining relevant and profitable in the digital age. It is not a question of strategy; it is one of survival.
Ensuring comprehensive technological integration across all our entities is something I’ve prioritised since becoming CEO of Britannia Financial Group in 2022. It enables us to bring the best possible range of products and services to our clients, free from the burdens of antiquated legacy systems.
Private banking is often stereotyped as inflexible and apprehensive to move away from traditional orthodoxy. I really do think this is a mischaracterisation!
In reality, technology is being used by asset and wealth managers to drive alpha generation and distribution, allowing banks to offer AI-driven investment strategies which maximise returns.
What other advantages does the use of AI offer?
Simpler applications, such as streamlining backend processes, free up resources and time for banks to offer the high-quality, personalised service needed to maintain strong customer relationships – the bedrock of any private banking practice.
AI can bolster private banks’ ability to manage and scrutinise data in a way which ensures higher levels of compliance and detect unusual transactions with a level of accurate efficiency unattainable by an analyst in New York, London or Hong Kong.
How are clients reacting to this change?
Well integrated, user-friendly digital services have been embraced broadly by consumers.
However, half of banking and insurance customers (49%) feel that the value they received from their AI interactions was non-existent or less than expected. This is unsustainable in a “ChatGPT world”.
Increased automation will be crucial to ensuring the industry can reach and retain its next generation of wealth and asset management clients. Equally important is the effective blending of automated and high touch services. We are, first and foremost, a client driven industry, so maintaining interpersonal relationships is really key.
The need for a greater focus on ‘green’ investment is often lauded as the way of attracting millennial and gen Z clients. Whilst this is undoubtedly true, many commentators fail to understand the ever-growing expectations for outstanding technological experiences.
How does private banking compare to other financial services when looking at AI integration?
While some of us are actively changing how we work and despite the clear strategic benefits of pursuing deeper integrated automation, private banks are often seen lagging behind their commercial peers.
The number of industrial automation related patent applications in the industry stood at 27 in Q3 2022, down from 36 over the same period in 2021. Figures for patent grants tell the same story, shrinking from 39 to 29 in that timeframe.
Private banks must grasp the opportunity to use AI to disrupt the traditional banking status quo – offering highly personalised services, with stellar returns, despite lacking the resource and manpower of ‘Bulge Bracket’ banks.
It is a key part of the scaling up process – driving efficiencies and economies of scale, improving current client offering and making services more attractive to the next generation of investors.
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