From physical to digital to AI native: the journey continues

For longer than most fintech founders have been alive, I’ve been advocating digital transformation. Digital transformation is where digital is at the heart of the business. You convert from physical to digital by reinventing the business and the business model. You start with digital at the core, and add physical on top when and where it is needed. Unfortunately, most of the companies I advocated this policy to, did the opposite. They had an ingrained physical structure and business model, where technology was added on top. They added digital ‘channels’, and called it multichannel and, more recently, omnichannel. What a load of bollocks. Customers don’t want channels. They want access. Another subject I’ve discussed many times.

The thing is that the theme of digitalisation has been explored in depth for ten to fifteen years by many. It saw the rise of the fintech community and the move to cloud and mobile. Today, most of us are truly digital. We are digital natives and digital nomads, We go anywhere, anytime, connect and work, do business and share socials.

The world has become truly digital.

This means that if you are not truly digital with digital at the core by now, you are too late, because the world is now becoming agentic.

If you are launching a bank today, forget about launching a digital bank with digital at the core. You are too late. Everyone has been there and done that. If you are launching a bank today, you should be launching an AI bank with AI at the core.

Some of the design principles of the AI-native bank remain the same. You still start with customers needs – loans, savings, investments, credit – but you build it different. The assumption is that the apps and APIs are already there, available on the network. So you start with talking to Claude, ChatGPT and Gemini.

Build me a process for creating a home, including its financing

Create the best experience for seeing how to invest

Generate the MVP for deposits and loans

You name it, they can build it … but the examples I’ve given are too simplistic as we now want an agentic AI-native system.

 Build me a process for creating a home, including its financing  … and how to support the user through agentic AI in that process

Create the best experience for seeing how to invest … and how to support the user through agentic AI in that process

Generate the MVP for deposits and loans … and how to support the user through agentic AI in that process

In other words, we can very quickly turnaround massive tasks in minutes using AI-native processes and agentic advisors. But we can only do this if the apps, API and analytics model already exists within the organisation. In other words, you can become an AI-native financial institution if you are a digitally-native financial institution; you cannot if you are still analogue focused trying to become digital.

Unfortunately, many financial institutions are still struggling with doing digital. They are still a long way away from the digital business model. Two out of five American banks run on COBOL, and some banks are still rumoured to be running their core systems on platforms that were developed half a century ago.

You cannot be truly digital on an AS400.

Truly digital starts with being digitally native has already been done. Truly intelligent starts with being AI-native, and that means fit for agentic AI and beyond.

Are we there yet?

No, we are never there. It’s a journey, not a destination. Having said that, if you’re not digital yet, then you missed that journey. It’s over. Done and dusted. We are moving beyond. Can you keep up?