The Future of Banking In An AI World

9 min readOct 9, 2023

Since 2007, the financial services industry has undergone significant transformations, driven by technological advancements and changing customer expectations. In truth, it has been a transformation that was long overdue for an industry that was bloated, unchallenged and self-centred. The customer was important, but not as important as the self-serving preservation of the status quo.

To better understand what’s coming next, it’s worth considering the trends and challenges that have shaped the banking industry over the past fifteen years. In this article for Wiser!, I will explore some key insights and case studies that shed light on the evolving landscape of retail banking post the 2007 financial crisis.

Retail Banking Post 2007

The global financial crash of 2007/8 served as a catalyst for significant changes in the banking sector. When I take a macro look at how the landscape has changed, I see five examples that illustrate how banking has transformed since then:

The Rise of Neobanks: Neobanks, such as Revolut, Monzo, and N26, have disrupted the banking industry by offering digital-only, user-friendly banking experiences. These neobanks have attracted customers with their convenience, low fees, and seamless interfaces. Their emergence highlights a shift in customer preferences towards more accessible and tech-driven banking solutions.
The Adoption of Cryptocurrencies: The creation of cryptocurrencies, led by Bitcoin, has revolutionised the financial landscape. Cryptocurrencies offer advantages such as transparency, low transaction costs, and global accessibility. However, they also face challenges related to volatility, security risks, and regulatory uncertainty.
The Development of Robo-advisors: Robo-advisors, such as Betterment, Robinhood and Wealthfront, leverage algorithms and artificial intelligence to provide automated investment advice and portfolio management services. These platforms offer lower fees, personalised recommendations, and convenient access to financial advice, catering to the needs of tech-savvy, retail investors.
The Failure of Peer-to-Peer Lending: Peer-to-peer lending platforms, like Lending Club and Funding Circle, promised to disrupt traditional lending channels. These platforms connected borrowers directly with lenders, offering faster access to loans at competitive rates. Peer-to-peer lending offered an alternative financing option for individuals and small businesses, especially in the aftermath of the credit crunch caused by the financial crisis. Ultimately, exposure to default loans for an unsuspecting and inexperienced customer base proved too much for the fledgling P2P sector to withstand.
The Emergence of Open Banking: Open banking initiatives, such as PSD2 in Europe and CDR in Australia, aim to increase competition and innovation in the banking sector. Open banking enables customers to share their financial data securely and access a wide range of financial products and services from different providers through a single platform or application. This trend empowers customers to have more control over their financial lives and encourages collaboration among banks, fintechs, and other stakeholders.

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Disruptive Technologies in Financial Services

The emergence of disruptive technologies has fuelled the transformation since 2007:

Artificial Intelligence (AI): AI has made significant strides in financial services, enabling tasks such as fraud detection, risk management, and customer service. By leveraging AI algorithms and data analytics, banks can offer personalised experiences, improve efficiency, and enhance decision-making processes.
Blockchain: Blockchain technology has transformed the way transactions are conducted, offering enhanced security, transparency, and efficiency. It has enabled the development of cryptocurrencies, smart contracts, and decentralised finance (DeFi), paving the way for a more decentralised and secure financial ecosystem.
Cloud Computing: Cloud computing has revolutionised the scalability and accessibility of financial services. Banks can leverage the cloud to store and process vast amounts of data, enhance cybersecurity measures, and provide seamless and personalised experiences to their customers.
Biometrics: Biometric authentication methods, such as fingerprints and facial recognition, have strengthened security measures in financial services. Biometrics offer a more convenient and secure way for customers to access their accounts, reducing the risk of identity theft and fraud.
Embedded Finance: Embedded finance refers to the integration of financial products and services into non-financial platforms and ecosystems. This trend enables customers to access financial solutions seamlessly while interacting with other industries such as e-commerce, social media, and mobility.

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Changing Landscape: Fifteen Years

Some of the milestones and trends in the disruptive transformation of retail banking since 2007 include:

In 2008, Bitcoin, the first decentralised digital currency based on blockchain technology, was launched by an anonymous person or group under the pseudonym Satoshi Nakamoto.
In 2009, Square, a mobile payment company that allows merchants to accept card payments using a smartphone or tablet, was founded by Jack Dorsey and Jim McKelvey.
In 2010, Stripe, an online payment platform that enables businesses to accept and process payments over the internet, was founded by Patrick and John Collison.
In 2011, Ant Group, a Chinese fintech giant that operates Alipay, the world’s largest mobile and online payment platform, as well as other financial services such as credit scoring, wealth management, insurance, and lending, was spun off from Alibaba Group.
In 2012, Lending Club, a peer-to-peer lending platform that connects borrowers and investors directly, became the first US fintech company to go public.
In 2013, Coinbase, a cryptocurrency exchange and wallet service that allows users to buy, sell, store, and transfer digital currencies such as Bitcoin and Ethereum, was founded by Brian Armstrong and Fred Ehrsam.
In 2014, Apple Pay, a mobile payment and digital wallet service that allows users to make secure and convenient payments using their iPhone or Apple Watch, was launched by Apple.
In 2015, Revolut, a UK-based neobank that offers a range of banking services such as currency exchange, money transfer, budgeting tools, crypto trading, and insurance, was founded by Nikolay Storonsky and Vlad Yatsenko
In 2016, Zelle, a digital payment network that allows users to send and receive money instantly from their bank accounts using their phone number or email address, was launched by a consortium of major US banks.
In 2017, Robinhood, a commission-free stock trading app that democratizes access to the financial markets for millions of retail investors, was valued at over $1 billion after raising $110 million in Series C funding.
In 2018, Monzo, another UK-based neobank that offers a user-friendly app-based banking experience with features such as instant notifications, spending insights, savings pots, overdrafts, and loans, was granted a full banking license by the UK regulators.
In 2019, Libra, a proposed but never implemented global digital currency backed by a basket of fiat currencies and managed by a consortium of tech companies led by Facebook, was announced amid much controversy and regulatory scrutiny.
In 2020, PayPal, one of the world’s largest online payment companies, announced that it would allow its US customers to buy, sell, and hold cryptocurrencies within its app.
In 2021, Stripe, became the most valuable private fintech company in the world after raising $600 million in Series H funding at a valuation of $95 billion.

Whilst many people have contributed to this disruptive transformation of financial services since 2007, some of the most influential ones are:

Jack Dorsey: Jack Dorsey is the co-founder and CEO of Square, a mobile payment company that allows merchants to accept card payments using a smartphone or tablet. He is also the co-founder and CEO of Twitter, a social media platform that enables users to share short messages and news. Dorsey has been instrumental in democratising access to financial services and empowering small businesses and individuals with simple and affordable tools.
Patrick Collison: Patrick Collison is the co-founder and CEO of Stripe, an online payment platform that enables businesses to accept and process payments over the internet. He is also the co-founder of Increment, a magazine about software engineering, and Atlas, a platform that helps entrepreneurs start and run global companies. Collison has been influential in driving innovation and growth in the fintech industry and supporting the development of the internet economy.
Brian Armstrong: Brian Armstrong is the co-founder and CEO of Coinbase, a cryptocurrency exchange and wallet service that allows users to buy, sell, store, and transfer digital currencies such as Bitcoin and Ethereum. He is also the co-founder of GiveCrypto, a nonprofit organization that distributes cryptocurrency to people in need. Armstrong has been influential in popularising and legitimising cryptocurrencies and blockchain technology as a new form of money and finance.
Jackie Reses: Jackie Reses is the founder and CEO of Lead Bank, a digital bank that provides banking and lending services to fintech and crypto startups. She is also the executive chairman of Square Financial Services, a subsidiary of Square that offers banking products to small businesses. She was previously the head of Square Capital, a lending arm of Square that facilitated over $10 billion in loans to small businesses. Reses has been influential in enabling fintech and crypto companies to access capital and banking services that were traditionally reserved for large institutions.
Nikolay Storonsky: Nikolay Storonsky is the co-founder and CEO of Revolut, a UK-based neobank that offers a range of banking services such as currency exchange, money transfer, budgeting tools, crypto trading, and insurance. He is also an angel investor who has backed several fintech startups such as Curve, TrueLayer, and Rapyd. Storonsky has been influential in creating a user-friendly app-based banking experience with features that cater to the needs of modern and global customers.

The Future of Retail Banking: 2038

When I get out my crystal ball and look ahead to the future of banking, I anticipate several trends prevailing over the next 15 years.

Human-Centered and Purpose-Driven Banking: Retail banking will become more focused on delivering personalised experiences that align with customers’ values and goals. Banks will leverage AI, biometrics, and data analytics to tailor their services to individual preferences and provide purpose-driven solutions that address customers’ specific financial needs.
Open and Interconnected Banking: Open banking initiatives will continue to grow, enabling customers to access a wide range of financial products and services from different providers through a single platform. Banks will collaborate with fintechs, digital giants, and players from other industries to create innovative business models and ecosystems that offer seamless and interconnected financial solutions.
Decentralised and Democratised Banking: I see a role for Bitcoin, as a store of value, and Ethereum, as a decentralised network for alternative finance. The rise of cryptocurrencies and decentralised finance (DeFi) will challenge traditional banking models. Customers will have more control over their finances, the cost of banking will be an order of magnitude lower and barriers to entry for the financially excluded will come down.

Conclusion

The financial services industry has undergone significant transformations since 2007. Disruptive technologies, such as artificial intelligence, blockchain, and cloud computing, have reshaped the way banking services are delivered and experienced. The rise of neobanks, the adoption of cryptocurrencies, the development of robo-advisors, and the emergence of open banking have all contributed to a more customer-centric and technologically-driven retail banking landscape.

Looking ahead fifteen years, we can expect this technology-driven transformation to continue. Human-centered and purpose-driven banking will become the norm, with personalised experiences and tailored solutions that align with individual values and goals. Open and interconnected banking will enable customers to access a wide range of financial products and services seamlessly, while decentralised and democratised banking will challenge traditional banking models and empower individuals to take control of their finances.

About The Author

Rick Huckstep has worked in technology his entire career, as a corporate sales leader, investor in tech startups and keynote speaker. From his home in Spain, Rick is thought leader in emerging technologies and the shape of tomorrow’s digital world.

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