AI in banks? It’s all marketing and FOMO
As banks are rush to beef up their AI capacity Samuel Norman recounts the sentiment shared across the industry at a conference in Copenhagen last week.
Like all sectors, banks are chasing the promises of AI.
The industry is shrugging off growing fears around job losses and rushing to beef up their AI credentials. Last week I took a trip to Copenhagen, where global industry leaders gathered to chew the fat on tech and software developments in the banking sector.
Temenos – the banking software provider – convened their annual community forum, which hosts bigwigs from tech giants such as Microsoft and Nvidia as well as top lenders from the 150 national markets it supplies.
As with any event that centres around tech, it was AI that dominated the agenda – both on stage and off. A recurring message was one of fear-of-missing-out (FOMO).
Banks want to hear what other banks are doing
Barb Morgan, the firm’s tech officer, said that in conversations with banks the consistent requests from lenders concern what their competitors are doing.
“Some of those questions are coming in more of ‘what are our peers doing? What are you seeing? What are the areas that you guys are investing in?’” she said.
It is a simple line of inquiry that underscores an difficult truth: while banks are revving up in an AI arms race driven by FOMO, they are accelerating toward a finish line that is still shrouded in mist.
But that lack of direction doesn’t make banks any less bullish, nor does it hinder the rate of adoption coming through in new AI tools. Anthropic’s latest tool – that it says is so powerful it could be dangerous to release – has rattled the ecosystem so drastically that governments, central banks and lenders are staging emergency summits.
One tech boss attending the conference told me there were going to be some “horror stories” as these latest AI innovations integrate into the banking system.
“People using AI to build their own software… they are going to trip up,” they added.
The governance question is one that cropped up throughout the event, which is no surprise as playing in the AI field is high reward but even higher risk. So much so the Treasury Select Committee took aim at regulators earlier this year for “not doing enough to manage the risks presented by AI”.
Despite using the event to frame its vision, Temenos has also experienced the complicated reality of AI’s relentless march. As Anthropic’s Claude tool wiped nearly $1trn off the global market earlier this year, the firm was swept up in the drama, losing over 13 per cent from its share price in a week. Though analysts at Bank of America did offer some optimism in a report on the market bloodbath, where they ranked Temenos among those facing the lowest levels of AI risk.
When I put the Anthropic question to Sairam Rangachari, Temenos chief product officer, on how the company plans to compete with the likes of Anthropic, he admitted “selling governance is key, but not sexy.
“But we sell to bankers – they get it.”
He recounted the firm’s capital markets day, where they took the mission to sell their AI narrative to investors “head on”.
“When we go to investors, we sell them who we’re selling into… we’re selling into banks. This resonates. We walk them through the fact that ledgers have to be auditable and deterministic, and AI hallucinations have no place in there.”
AI is a ‘game of marketing’
But the narrative question is not one that can be ignored – and many insiders told me that marketing is in fact at the route of the AI arms race.
One top industry boss told me: “It’s become a game of marketing.”
Another added: “Anyone can say they’re doing AI and their stock pops… people actually in the know want to see actual solutions like how are you cost saving.”
In the UK, banks are scrambling to pull ahead in the AI race. Lloyds has been the most vocally bullish, going as far as sending top executives and boss Charlie Nunn to Cambridge University for an AI boot camp.
This has partly come as they rush to keep pace with the fintechs. Starling and Revolut both launched AI personal assistants in the last few months and traditional banks have quickly responded. It was this paper that revealed at the end of April how Lloyds had forged a tie-up with Google to build its own AI agents.
Regardless of the company or the direction, it does seem to be accepted that the banking sphere will soon be fully engulfed by AI.
William Moroney, chief revenue officer at Temenos, made clear the scale of the transformation for customers: “We’re going to come down from the bedroom in the morning and start interacting with Alexa, or with Google or whatever AI assistant that we will be using.
“They’re going to start talking about what’s going on in our financial world, salaries received and moved to a particular account – this is definitely going to happen”.
Perhaps the road to this brave new world, where your morning coffee comes with automated wealth management, is more blind faith than it is divine intervention. But as long as top lenders can convince the markets that they have a seat reserved in this new digital heaven, the collection plate is set to keep filling up.