It is time to level up

We are in a third generation of change in finance.

When I wrote Digital Bank over a decade ago, the focus was all about reinventing banking from being physical at the core to being digital at the core. Now we have to do it all again and reach the next level where the bank is intelligent at the core. Levelling up the bank will be the biggest challenge for the next decade as so many banks are still trying to do digital and some have hardly started. The race to intelligence begins.

What do I mean by these things?

Well, the premise of moving from physical to digital is the reinvention of the bank’s last century business model of having physical distribution using building’s with people to moving to a digital distribution using software and servers. The model has to change from the distribution of paper – cheques and cash – to the distribution of data – apps and APIs.

Most of us get this today but ten or twenty years ago it was nascent. Most of us today have levelled up from the old model to the new. The major difference in the model is that in the last century banks focused upon their physical structure and layered digital technology on top of it. Now, we focus upon the digital structures and add physical on top of the digital structure where it is felt necessary.

Digital is done, for some.

The biggest challenge during this change was that banks had their traditional structures and rebuilding them was hard. This is what led to the opportunities to digitalise products, processes and people using apps, APIs and analytics. It is the hole that opened between the physical distributors and the digital distributors. It created the fintech revolution fuelled by two key maturing technologies: cloud computing and the internet of things, which centred on the mobile data network and smartphones.

Fintech changed everything in traditional banking and is also now a maturing market*. So, what’s next? It is obvious: we have to build the intelligent bank.

The intelligent bank is one that has done digital:

• it has rationalised and consolidated data and systems;
• has embraced fintech by partnering or acquiring the most relevant players to their core business;
• has integrated and created an apps, API and analytics business; and
• has recreated distribution by gradually removing the physical structures – branches – with digital structures – apps.

What it has not done is understood the customer. Some would say they have little KYC.

An illustration is an old project in one bank that was called Project Jigsaw. The purpose of the project was to get a full view of a customer by integrating knowledge from their retail data and integrating that knowledge with information from their business data. Targeted at small business banking, it was trying to gain and integrate knowledge from both the SME perspective with the small business owners’ retail accounts. It didn’t work, but at least they tried.

That Jigsaw is now 1000% more complex. How can you track and trace data between a family? How can you gain a 360-degree view of a customer when GDPR stops you? How can you move from a disparate, fragmented, product-focused, line of business structured business to a transparent, integrated, consolidated, customer structured business?

The building blocks are already in place and in play. Most banks have done or are doing digital. They are building a data leveraged, customer focused company. But I have a question. Are they building an effective data leveraged, customer focused company?

This question relates to the themes of my presentations, which are all around the only constant is change … but change into what?

We have levelled up from physical to digital, but we are now levelling up once more, and the challenge is how to be intelligent at the core. It is the AI revolution.

We all know the buzzwords and discussions around Generative AI, Agentic AI and such like. Yet many have not realised that the intelligent revolution will be as dramatic as the digital revolution. The digital revolution focused upon cloud and connectivity; the AI revolution is focused upon data and intelligence.

Banks have all the data about customers, but it is fragmented and disparate. A jigsaw. During the digital revolution, the jigsaw remains. The problem with that jigsaw is that you cannot be intelligent with dumb data. Data needs to be leveraged and turned into knowledge, and knowledge must be turned into intelligence.

Intelligence will be demonstrated in every interaction with everything. Whether it be a customer using an app; connecting on a mobile; speaking to Alexa at home; driving with a self-driving car that, as it happens, is connected to your insurance systems; and more, digital intelligence will be everywhere.

What this means to fintechs and financial institutions is to show intelligence at the core and really and truly and intimately KYC: KNOW your customer and KNOW your criminal.

We are at a new level to turn from being physical to digital to intelligent, and most are only just starting that journey.

 

* The global fintech market was valued at approximately USD 340 to 387 billion in 2024, with different reports projecting values like USD 378 billion or USD 387.4 billion for that year. The market is expected to grow substantially, with various forecasts predicting it will reach over USD 1.1 trillion by 2032 or even over USD 1.5 trillion by 2033, driven by factors like increased internet and smartphone adoption, changing customer preferences, and ongoing regulatory support.

Key reference: FinTech Market Overview with Size, Share, Value | Growth [2032]