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The Digital Banking Annual Meeting 2024 opened with welcome remarks from Keun Ju Lee, president of the Korea Fintech Industry Association (KORFIN). He focused on the acceleration of digitalisation within the banking industry and the impact of emerging technologies such as artificial intelligence (AI), blockchain, internet of things (IoT) and Web3 on financial services. The meeting took place this week in Seoul, South Korea.

Strategic futurist and author Mark van Rijmenam emphasised the transformative potential of AI within the banking sector. He explored the optimistic and dystopian views on technology, stressing the importance of innovating with a new mindset considering the data-driven nature of modern organisations. 

He detailed the three domains of AI—cognitive, robotics, and machine learning—and the impact of their integration on society and industries. He highlighted how intelligence extends beyond human capabilities and how AI could redefine limits, emphasising the rapid changes expected in the coming years due to the convergence of AI with other technologies like quantum computing and blockchain.

Van Rijmenam also covered the potential of generative AI in creating new content and its implications for the banking industry. He discussed the need for strong data foundations, the development of proprietary large language models like those of JP Morgan and Bloomberg, and the necessity for businesses to adapt to fully leverage the benefits of AI. He warned of the risks associated with AI, including misinformation and the erosion of trust, and called for education, verification, and regulation to mitigate these issues.

Key themes discussed at the roundtable

Practical implementation and ethical use of AI: Van Rijmenam’s emphasis on starting small, for example, integrating AI within customer service call centres, highlighted the importance of working with reliable partners, especially in the highly regulated financial industry. This led to a broader conversation about the ethical considerations and data privacy in using AI technologies with panellists Sarah Corley, Keith Carter, Damian Cummings, Barry Katz and Axel Winter.

AI adoption and market evolution: Steve Monaghan raised questions about how the market will evolve with AI’s reliance on baseline data, and the potential risks of commoditisation. Winter discussed the danger of ‘model collapse’ when AI models are trained on self-generated data, emphasising the necessity for high-quality, diverse data sources.

Regulatory and organisational challenges: Winter also touched on the regulatory aspects, suggesting that certain AI models should undergo scrutiny similar to new pharmaceuticals. This led to the necessity for banks to adapt internally, ensuring they have strong data foundations and environments conducive to innovation and experimentation.

Cultural and structural adaptations: Participants like Jeewong Kim from Toss Bank highlighted the cultural and organisational shifts required to embrace AI effectively, reflecting on past transitions during the digital media era. He underlined the importance of integrating AI meaningfully into business practices rather than as a standalone solution.

Real world applications and implications: The discussion moved to tangible AI applications within banking and finance, and its potential to impact fraud detection, customer service, and operational efficiency. Participants debated the balance between AI’s promise and its current limitations, and how financial institutions could navigate these challenges.

Strategic considerations for future development: The roundtable emphasised the strategic importance of AI, urging leaders to consider not only technological capabilities but also the broader implications for business models, customer engagement, and competitive dynamics in the banking sector.

Next, during the Heads of Digital Banks Roundtable, TABInsights director of research Christian Kapfer presented the Global Best Digital and Retail Banks Rankings, complementing the day’s  themes.

Kapfer discussed how digital banks are being assessed worldwide, emphasising the shift towards more meaningful engagement and profitability metrics. He also highlighted changing customer sentiments, with digital platforms beginning to surpass traditional banks in Net Promoter Scores.

Despite the banking sector experiencing record profitability, concerns about rising credit risks and deposit costs were highlighted, with a forecast of tighter margins in 2024 due to competitive pressures.

Kapfer noted significant uptake in open banking solutions among major retail banks in Asia, but less adoption of banking-as-a-service (BaaS) solutions. The trend is expected to grow, although banks face operational and regulatory challenges.

Increasing investments in fraud prevention and operational resilience are vital, he stressed, with new technologies like dynamic card verification value (CVV) codes and real-time scam prevention measures being developed to enhance security.

Kapfer also touched on the emerging trend of sustainable banking, urging banks to genuinely incentivise eco-friendly customer behaviour beyond superficial measures.

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