Digital banking in the artificial intelligence era: Strategies for serving nonhuman customers

David Birch and Kirsty Rutter
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David Birch: 15Mb Ltd, UK
Kirsty Rutter: Lloyds Banking Group, UK

Journal of Digital Banking, 2025, vol. 10, issue 1, 6-17

Abstract: The revolution in retail financial services comes not when banks are using artificial intelligence (AI) to provide services to customers but when customers use AI to assess offers from financial institutions. Those customers will have access to AI as powerful as the banks themselves have, because ‘Big Tech’ will give it to them. For most people, most of the time, in the not-too-distant future, their financial decisions, transactions and analysis will be performed by ‘bots’ operating under relevant duty of care legislation, with the coordinated goal of delivering financial health. The transition to banks serving these nonhuman customers presents a significant threat to retail bank profit pools. Look at the simple case of net interest margin. At a time of low interest rates, only one in 20 Americans refinanced their car loans, thus donating an average of US$3,500 per car owner to the banks’ bottom line. Overall, US banks obtained a US$1tn windfall from the Federal Reserve’s two-and-a-half-year era of high interest rates, income that will vanish in an age of bots working across the financial services sector and operating on behalf of consumers to improve their financial health. Institutions must, therefore, begin to think seriously about bank strategies in this new age. This paper builds on the authors’ previous work on customer bots by examining the consequences of giving intelligent agents access to consumers’ accounts in real time, at any time, in a world where the consumer is supported and enabled by open finance, smart wallets, digital identity and, hopefully, good regulation. It explores important strategic elements for retail banks looking to prosper in a new age in which every customer has their own personal treasurer in their pocket, always on and always ready to act on their behalf. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.

Keywords: AI; smart wallet; open banking; open finance (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2025
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