The world’s first “Automated Teller Machine” or “ATM” was launched in a grand ceremony in June 1967 at a branch of Barclays Bank in North London. That first system looked a little different from the systems we know and use today. But almost six decades later, it is difficult to imagine a world where people can withdraw cash only during banking hours. Now, in Australia and around the world, banks are betting big on a new kind of automation that will transform their business models: artificial intelligence (AI).
On Monday, Bendigo Bank said it had signed a multi-year agreement with Google. Under this, he will use the tech company’s Gemini Enterprise AI platform to help in many tasks, which include examining loan applications and detecting fraud. This follows a major agreement between the Commonwealth Bank and OpenAI announced in August, which aims to “bring advanced AI to customers and employees”.
A call for change from AI
What is the future of banking – and whose responsibility is it to deal with the threats? Some big changes have already happened. Right now, AI is helping banks and employees make decisions. It is investigating frauds and scams, tracking credit scores, helping with trading and investment activities, and handling time-consuming daily tasks. It is not only Australian banks that are at the forefront of this work.
For example, US investment bank JP Morgan has created its own AI platform, LLM Suite, which has reportedly been implemented across all of its business lines to help staff perform a variety of tasks. What’s going to happen next? But the next wave of AI adoption may be completely different. Instead of helping humans get things done quickly, technology can be trusted to make decisions and take actions on its own. This is called “Agentic AI”. Although only a few banks – such as Bank of New York Mellon – have tested it so far, the initial results are good.
Giving control to AI can increase productivity
Recent research from consulting firm McKinsey details a case study of a large global bank that created ten “teams” of AI agents to handle a new customer application from start to finish. These AI agents checked government registries, verified identities, checked restrictions and prepared reports. Humans helped only in a few cases.Increased productivity? According to McKinsey, basic AI automation can make teams 15-20 percent faster, but handing over complete control to AI can increase productivity by 200 percent to 2,000 percent.
Difficult Lessons Australian banks are betting too much on this future. But they are also learning hard lessons about the human cost. In July, 45 call center employees at the Commonwealth Bank were told they were out of a job following the introduction of an AI chatbot. What does all this mean for the future of banking? This means that in the coming time, AI systems will be able to run the entire banking system on their own. Imagine applying for a loan at 2 in the night and getting approval five minutes later, with AI handling every step of the way. How to deal with the threats?
The public expects banks to deploy accurate, understandable and secure AI systems. But technology is advancing so rapidly that even regulators are struggling to keep up. There is particular concern about algorithmic bias. If AI learns from past data that shows past discrimination, it could perpetuate or even exacerbate lending practices.
Banks themselves are responsible for any mistakes made by AI. Accountability cannot be outsourced to algorithms. However, it is possible that the customer may have to suffer the consequences of those mistakes. AI is going to completely change banking, whether we are ready for it or not. This may mean that banking becomes cheaper, faster and more privatized. But it also threatens jobs, raises privacy concerns and puts too much power in algorithms that most of us do not understand.
Also read: In which sector will most people’s jobs be lost due to AI? Know what the reports say
Khanderao Deshmukh aims to guide job seekers by delivering accurate, timely, and easy-to-understand information, helping them secure stable government careers.
