Insights from Money20/20: AI, Faster Payments, and the Future of Banking

The financial services industry is undergoing significant evolution in recent years, propelled by emerging technologies such as artificial intelligence, coupled with increasing demands from customers and a changing tech landscape.

Recently, I attended the annual Money20/20 conference in Las Vegas where I had the opportunity to talk to various IBM experts and bank executives on their transformation journeys. Here are the four themes that emerged from our discussions:

[1] Instant is the Holy Grail.

The industry is moving towards faster and instant payments. Real-time payments create immense opportunities for businesses, especially for small and medium enterprises, enabling them to forecast and manage their cashflow more effectively.? This is also critical for workers who are living from paycheck to paycheck, or those who face uneven and unpredictable income due to the nature of their work.

While faster payments enable new opportunities, however, having the proper controls in place is essential to safeguard against potential risks that come with new dynamics.

[2] Customer-centricity wins. What’s old is new again.

With data comes the opportunity to hyper-personalize for today’s customers as they demand more. Mainframe application modernization remains essential to digital transformation as banks work towards delivering unified customer experiences across channels and platforms, enabled by generative AI and hybrid cloud optimization. ?

[3] Fundamentals still matter.

Fundamentals such as trust, data security, and privacy are more important than ever. While emerging technologies such as generative AI have immense potential to create value for financial institutions, we must carefully balance innovation with risk management and security. Else, we may risk damages to the brand and reputation.

[4] Money movement across borders matures.

Digital assets present opportunities for seamless and efficient cross-border payments. Continuous collaboration between financial services industry and regulators is needed to facilitate interoperability and global standards towards a true borderless 24x7 instant money movement.

I am encouraged by the success stories, such as that of RBC Clear, where RBC Capital Markets, in collaboration with IBM and other partners, has drastically reduced the time for corporate account opening from 45 days to one —?by re-imagining the cash management journey with corporate treasurers and re-shaping the experience with a future-state tech platform, including generative AI from watsonx. Or KeyBank, where the bank can create additional value for their customers by enabling them to leverage cutting edge technology through the bank's digital transformation journey, which includes IBM Z as mainframes continue to be an enduring component of modern technology architecture due to their reliability, resilience, and security. Generative AI has immense potential to help augment employee productivity and modernize applications, IT operations, and processes —?delivering a win-win for both the bank and their customers.

We are merely scratching the surface for what technology can do to solve real customer pain points and create new economic value. A great example is banking for small medium businesses (SMBs), which form the backbone of our global economy. According to findings from a recent study by IBM’s Institute for Business Value and BIAN, with contributions from the IFC, there is a sizeable disconnect between what the banks offer for SME banking services versus what the SMBs need. Beyond the $5.7 trillion SME funding gap, SMEs also pay a credit premium when accessing funding opportunities. Breaking down these barriers with data and AI can help foster growth in a diverse and crucial segment of our society and open up new opportunities for value creation for banks that embrace generative AI to better serve this important market segment.

Technology has created unprecedented opportunities for transformation for the financial services industry and beyond. From faster payments and seamless cross-border transactions to better banking services for SMEs and financial inclusion for the underrepresented demographics, technology —?and money movement —?serve as a tool to solve real challenges in our society and transform everyday experiences for good. Success depends on our ability to focus on creating customer value and delivering enhanced customer experiences while minimizing risks and maintaining trust, privacy, and security.

The future belongs to those who can harness data, AI, and automation to invest in new value creation and unlock new possibilities. It is not a matter of whether we will embark on the transformation journey. Rather, it’s about picking the right use cases and innovating responsibly and collaboratively. ?It’s time to get on board.

***

Here are some of the documents that the IBM experts have shared in our conversations.

[1] The next frontier in defending against payment fraud: Harnessing generative AI and cloud solutions.

Financial institutions can stay ahead of fraudsters by leveraging generative AI, fostering cross-industry collaboration, and transitioning to cloud-based SaaS infrastructures that scale to address the demands of modern fraud prevention.

[2] Mainframes as mainstays of digital transformation: A foundation for hybrid cloud optimization and AI innovation.

Mainframes can help unlock the full potential of AI-driven digital transformation, accelerating ROI, and enabling business innovation and growth.

[3] Banking for small and medium enterprises: Serving the world economy with data and AI.

Small and medium enterprises represent a big untapped market. Banks have the opportunity to help them bridge the gap between business intent and tech-led productivity.

***

Tune in to our conversations at Money20/20 here.

[1] Innovation in payments

[2] Innovating for the future with digital assets

[3] Beyond Hyper-Personalization: The Future of CX

[4] Re-imagining the Future of Corporate Treasury & Cash Management

[5] Transforming the Future of Banking and Financial Markets

#AI #Fintech #FinancialServices #BankingIndustry #watsonx #IBMPartner

This article is sponsored by IBM, but the opinions are my own and don’t necessarily represent IBM’s positions or strategies.