Banks are going to look less and less alike than we’ve become accustomed to over recent decades, ANZ Banking Group chief Shayne Elliott said at a conference.

Addressing a packed auditorium comprising fintech start-up founders, venture-capital investors and banking executives from around the world at the Sibos conference in Sydney on Monday, Elliott publicly questioned the idea of a “universal banking model” and added that banks are all grappling with their source of competitive advantage.

“Just turning up and being a bank will no longer be a successful model,” Elliott told the audience.

The universal banking model involved leveraging customer relationships via the bank’s various services, Elliott explained.

“Over time, I think we’ve found the cost and complexity of running that [vertically integrated model] has made that universal banking model less sensible and efficient, both in terms of cost and compliance,” he said.

Indeed, banks began making movements to offload their wealth management businesses in recent years – ANZ was one of the first to sell its third-party licensee business to IOOF, in late 2017.

“Some banks will operate vertically and there will be some that specialise horizontally,” Elliott mused.

The catalyst for banks to change their business models has involved: the creation of digital data, a move to open banking, the emergence of new technology, the evolution of big data and the declining cost of digitalising strategies, Elliott explained.

Partnering and open-source technology were among the most prominent themes discussed throughout many sessions on the first day at Sibos.

“There are a lot of things that work against you if you keep it internal,” Said Ralph Achkar, State Street’s managing director of digital product development and innovation, during a session titled, “The Rise of Artificial Intelligence in Financial Services”.

“Today, there are systems that have been in place for decades and they have created multiple silos, Achkar said. “A lot of the work we are doing now is to try to pull all the information together. We’re not doing AI now, what we’re doing is working towards it.”

Many financial services businesses are on a “maturation path” towards adopting and incorporating technology to leverage the customer data banks have at their disposal, he explained.

Achkar joined Ramneek Gupta, Citi Ventures co-head of venture investing, and Tomer Garzberg, founder and chief executive of consulting firm GRONADE, to discuss the progress of machine learning and AI in financial services.

The panel concluded that retail banking is just the frontier of applying machine learning to their businesses.

“The first place we’re seeing the application of machine learning is in customer engagement, customer onboarding, customer outreach, customising websites for individual customers…That’s where the industry has the best and the cleanest data,” Gupta explained.

To survive and thrive in this environment, the incumbent players will need to change culture and direction, Elliott acknowledged.

“Banks [that survive will be the ones] that are agile, that can move at pace…That means having the right people, who are capable of learning, who look at other industries and other professions, who are curious and take on other ideas,” he said.

Smith is the editor of Professional Planner’s print and digital platforms. He is an experienced financial journalist, editor and multimedia producer who has held senior editorial positions both in mainstream press and trade media.
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