The promise of AI and blockchain in banking & fintech. Here's what it means.

The promise of technology.

If I make abstraction of my technological background, and look at fintech and banking services innovation through the consumer lens, the simple question is: what can technology do for me? how will it solve my needs, give me back time and reduce or even eliminate pain points in my day-to-day life?

It's a fair question, and the answer goes to the heart of the promise of technology...

• Convenience, with security: providing a friction-less experience to the user (transparent payments) but without compromising security, by leveraging biometry, machine learning and behavioural analysis to virtually eliminate fraud.
• Mass personalisation: the Walmart's, Amazon's and Costco's of the world have democratized purchasing, but in the process consumers have lost the very special, personal relationship we used to have with mom and pa stores, where the owner/chef of a restaurant knew our favorite dishes and the owner of a clothing store the types of shirts we love. AI has the potential to re-create mass customisation, and make consumers feel unique and valued, with relevant offers and differentiated treatment.
• Automation, with control: automating everything may lead to a loss of control by the user, akin to throwing the baby with the bath water. I get a monthly electricity bill for my house in Florida. Now, imagine if I could instruct my bank by way of a "smart contract": if the invoice is between $50 and $120, pay it in a fully automated manner (this should cover 98% of the cases). However, if its below $50, route it to me, as it may be indicative of the air conditioning being broken which requires action on my part. Similarly, if it's over $120, I also want to see the invoice, as it may indicate that someone left all lights on and the bill is $300, also requiring action on my part. Bottom line: automate the bulk of the transactions, but preserve control over anomalies and exceptions => the best of both worlds.
• Quantum performance gain: increase in speed, reduction in cost and improvement in the quality of the services rendered. Whether it's the efficiencies brought about by AI chatbots or machine learning, or by the blockchain distributed ledger architectures, companies are increasingly leveraging technology to create value. For example, Paysafe Pay Later has reduced the time for an in-store credit application tenfold, from 20 to 2 minutes. Similarly, Ant Financial has their "310" small business loans: 3 minutes to apply, 1 second to receive the funds, 0 manual intervention.

What it means for companies

It means that, in order to accrue the benefits and grow significantly, companies must structure themselves to take full advantage of AI. As Stanford University professor and Google Brain co-founder Andrew Ng says: a brick and mortar store with a website is NOT an internet company; similarly, an internet company with a neural network is NOT an AI company.

Because being an AI company requires...

• decisions to move down to engineers and product managers, who are closer to the customer
• strategic data collection and iterative product development
• single data warehouse for the entire company, so that it's possible to gain a full view of customers by correlating all of the relevant information across products and divisions
• pervasive drive to automate
• new roles and ways to do things, such as writing product specifications in terms of probabilistic models (e.g. old way: mock-up of a website user interface; new way: given a set of collected video signals, self-driving car should be 99.9999% certain that it's not about to collide with an object or pedestrian)

It's been said that "luck is when opportunity meets preparation" ... for example, conversational commerce and banking is an interesting area of growth for fintechs and banks, with only 8% of US customers currently using it, but expected to almost quadruple to 31% in only 5 years. However, Paysafe's primary market research shows that, while excited by smart speakers and conversational commerce, fully two thirds of consumers are concerned with security, for example: being overcharged, being registered into subscriptions they didn't want, etc. To succeed in this area, companies must address the real (and/or perceived) consumer concerns by finding effective ways to increase consumer confidence (e.g. SMS/email confirmations, easy process to challenge charges, etc).

What it means for individuals

As a consumer, I look forward to enjoying the benefits in terms of speed, convenience, security, personalisation, cost-effectiveness and why not, coolness, that these technologies are bringing about.

Preparing our children to succeed in a world driven by disruptive technologies, such as AI, blockchain, IoT, biometry, quantum computing and others, is also a fascinating topic (e.g. to ensure they don't choose a field that's likely to be automated/displaced but rather one which will be in high demand and enable them to realize their dreams and aspirations), but we'll save this topic for the next post. :-)