Augmented: The next frontier in banking?

What do Pokémon GO and Google Glass have to do with banking? On the face of it – nothing, but let’s look a little closer. When Pokémon Go launched in July 2016, not even its developers expected it to take a mere 19 days to reach 50 million users. Vast, fast growth especially when compared to WeChat and Facebook – 1 year and 4 years respectively. In fact, by the end of 2016, it had been downloaded 500 million times. Metcalfe’s Law around network effects clearly helped power the explosive growth of the mobile game. What about Google Glass? When the prototype was launched in 2013, the product’s future seemed very bright. Journalism, education, healthcare and business in general – it had endless applications. But all was not rosy. Rising concerns about security, privacy and the ethics of recording people without their permission led to a downward spiral with production finally stopped in March 2023.

Both Pokémon GO and Google Glass overlaid digital information onto the real world. They are both examples of Augmented Reality technology – albeit one very successful and one, less so.

What’s the connection with banking? Do we see a future where consumers use headsets to interact with their financial services provider? Maybe. Or where people are chasing savings accounts around an augmented reality landscape? Unlikely. But the technology will continue to augment our capabilities and experiences. Consider the following examples.

Imagine stepping into a bank where every interaction is seamless, personalized, and instantaneous—where your financial needs are anticipated before you even voice them. Picture this: a customer, Sarah, receives a personalized financial insight from her bank’s AI assistant, predicting her future spending patterns and offering tailored investment advice – and it does it in a way that Sarah appreciates and doesn’t find creepy. What about inside the bank? Imagine a banker, searching for growth, asking their AI-powered assistant to generate some options for products they could launch. The AI might suggest that the 18- to 25-year-old segment in one geographical area is growing but also underrepresented in the bank’s customer base. It might go on to suggest a particular configuration of an introductory financial product – perhaps a special current account with rewards and no fees endorsed by a TikTok celebrity. Once given permission it might interact with all the necessary systems to launch the new product, monitor progress, and adapt accordingly.

Science fiction or impending reality? Most of the technologies needed exist. Augmented data – where internal data points are combined with vast, external data lakes – exists. The large language models and Gen AI systems, needed to digest, understand and suggest, exist. The core systems capable of not only serving up the data but supporting the instant creation of innovative, tailored products and services – they exist also.

In the future – and that future will arrive sooner than we think – AI-powered assistants will operate on behalf of consumers with agency and ever-increasing authority. In this world, velocity and volume will increase. While nothing new – consider the shift from the days when customers could only interact in branches with tellers or with ATMs to when internet banking and mobile banking rolled out. While velocity and volume ramped up it, they were still limited by human factors – the number of tellers or the number of customers. With AI-powered autonomous assistants the shift will be explosive. Instead of needing to operate at human-speed, banks will need to support machine-to-machine interactions. Not only do machines never sleep and operate at vast pace, but they can also clone themselves virtually endlessly. Pity the IT team that has to put in place the technology infrastructure to support this world. Especially when the consequences of service interruptions are factored in. In addition to the financial implications, in an age of instant communications, the reputational damage can be swift and immense.

This is where self-diagnosing, self-healing, self-curing core banking systems come into place. Imagine a system that is aware enough to not only determine that a problem has happened but intelligent enough to diagnose and fix the problem. The technology industry has long sought solutions to these kinds of problems – using redundancy, fall-over support systems etc. Indeed, the internet was designed to continue to work even if large parts of it became inaccessible. As technology sophistication continues to increase, newer approaches including containerization, orchestration, machine learning and AI will enable the augmented core needed to truly support a 24x7, machine-to-machine world.

As the mood music around data privacy and ownership continues to shift, how long will it be before people demand actual ownership of their own data? How could a bank operate if it needs to request access to key information from customers on an as-needed basis? Perhaps customers might even demand payment for access to their data. After all, if data is the new oil, then it is truly valuable so why should people give it away for free? There is an opportunity here for an innovative approach. Banks could extend their ‘trusted-partner’ relationship to cover securing their customers’ data and then they could offer data-related services on behalf of those customers, for a fee. Visionary bankers could get the ball rolling by creating new financial products that reward customers who allow access to their data. The value proposition for customers – where they generate passive income from data, they currently give away for free could be very attractive.

In summary, as banks navigate the complexities of modern finance, the concept of an Augmented Core and Data emerges as a vital frontier, blending advanced technologies like artificial intelligence with rich data insights. This isn’t just a futuristic dream; it’s the promise of an augmented banking experience. The term "augmented" evokes enhancement and elevation, suggesting a transformation that goes beyond traditional boundaries. As banks reimagine their roles in our lives, the concept of an augmented core banking system becomes mission critical, blending cutting-edge AI with vast data resources to create a seamless, intelligent, and proactive financial ecosystem. Welcome to the era of augmented banking, where the future is not just anticipated but actively shaped.