Revolutionizing Banking: The Path to an AI-driven Future with a Special Reference to Union Bank

Abstract

Banking stands at a transformative crossroads, propelled by technological disruption, shifting consumer dynamics, and the catalytic impact of the COVID-19 pandemic. This research charts the course for a new era in banking business models, introducing a paradigm shift known as 'the AI bank of the future.' Grounded in the advancement of artificial intelligence (AI) technologies, this model offers traditional banks the potential to elevate revenue while reducing costs, ushering in innovative customer engagement approaches. In response to multifaceted challenges, including market valuations, competitive threats from neobanks, and changing customer expectations, traditional banks are urged to become 'AI-first' in strategy and operations. This involves leveraging economies of scale through efficient AI deployment to enhance customer engagement with distinctive experiences and superior value propositions. The research meticulously explores the building blocks of an AI bank, delving into four critical layers: engagement, AI-powered decision-making, core technology, and data infrastructure, and a platform-based operating model. Through a series of articles, the study examines trends, challenges, and requirements for each layer, offering an end-to-end view of the capabilities essential for the AI bank of the future. The articles cover topics ranging from the challenges leading banks to adopt an AI-first approach, a day in the life of a consumer transacting with an AI bank, reimagining customer engagement, to AI-powered decision-making and the modernization of core technology. The final piece discusses the necessity of a platform operating model, emphasizing the deployment of AI and analytics capabilities at scale through cross-functional business-technology platforms. To embark on this transformative journey, bank leaders are advised to formulate strategic goals for the AI-enabled digital age, establish an AI-first vision, and strategically modernize enterprise technology. The research underscores the importance of assessing emerging technologies, prioritizing initiatives aligned with customer needs, and considering partnerships for non-differentiating capabilities while focusing on in-house development for distinct competitive advantages. In conclusion, building the AI bank of the future is envisioned as a pathway to innovation, competitive prowess against digital natives, and sustainable increases in profits and valuations. The research serves as a guiding compass, assisting banks in establishing their vision and crafting a strategic roadmap for this transformative journey into the AI-driven future of banking.