The banking transformation imperative

Banking transformation: woman laughing while holding a credit card and phone with a four-pronged star above it to represent AI

The banking industry has been investing in digital transformation for many years, with limited success. Only 30% of global banking leaders say their transformation efforts have kept pace with customers’ increasing expectations, according to recent banking transformation research by ServiceNow and ThoughtLab.

Many banks haven’t fared well in relation to more nimble competitors. Even where they have retained accounts, they’ve ceded relationship primacy. It’s hard for banks to differentiate themselves in a crowded market for financial services. What levers are available to banks beyond interest rates and branch footprint? How can they break through?

AI can help banks achieve long-held goals such as personalised customer experiences and frictionless servicing. Two-thirds of the banking executives we surveyed around the world—including 125 in the UK and Ireland (UKI)—agree AI will significantly change how banks operate.

Delivering frictionless banking experiences

Banks that are ahead in driving business transformation across their operations—which we call Pacesetters—are investing now to take advantage of AI technology. They plan to increase their AI spending in customer onboarding, sales and business development, customer service and experience, and other areas.

AI promises more flexibility to help customers drive their own journeys in moments that matter to them. At the same time, survey respondents expect AI to be the jet fuel that empowers and supports front—and middle-office personnel so that banking experiences can be swift, easy, and personalised.

Applying AI to an evolving risk landscape

Risk management and compliance are obviously core to bank operations, and the bar for these functions is constantly rising. Fraud is a major growth area, and it takes intensive effort to comply with regulations, network rules, and bank policies.

Key compliance areas include performance obligations, know your customer (KYC) and anti-money laundering (AML) guidelines, fair credit laws, and resilience objectives. Emerging compliance tech builds compliance into the fabric of operations while aggregating data needed for regulators.

According to our research, the majority (84%) of global Pacesetters are midway to advanced in digitising governance and compliance. They’re using AI to help with fraud detection, compliance and regulations, risk management, and cybersecurity. In UKI, 42% have already digitised risk, and 28% have digitised compliance.

In UKI, 42% have already digitised risk, and 28% have digitised compliance.

Generative AI can help banks demonstrate compliance to auditors. Other uses of the technology include risk prediction, automated compliance and transaction monitoring, and summarisation of compliance documentation.

Driving banking transformation

An overwhelming majority (74%) of banking leaders in our study agree end-to-end IT platforms that connect people, processes, and data will enable them to survive and thrive. Pacesetters are nearly twice as likely as others to embrace a platform approach to break down silos, reduce costs, improve experiences, and accelerate innovation.

In UKI, 51% are midway to advanced in implementing end-to-end platforms. As a result, they’re seeing improvements in:

In UKI, 51% are midway to advanced in implementing end-to-end platforms.

Looking ahead

Succeeding in this new age of banking requires thinking more in terms of business transformation than digital transformation. Technology and business can no longer be separated.

More than three-quarters of survey respondents agree digital workflows and automation will reshape how banking work gets done. Thanks to AI and other emerging tech, the future looks promising.

Gain more insights in our complimentary Transforming Banking report.