Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding.

The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to e-commerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more.

For a list of available titles, visit our Web site at www.WileyFinance.com.

This is the third of my published books and personally the most challenging in terms of subject matter, breadth, and complexity. I hope I meet at least some of the readers' expectations, and at least encourage them to undertake their own research.

I first became interested in banking at a professional level nearly two decades ago but became personally engaged with banking over 40 years ago without really understanding what was involved. Perhaps many of us are the same.

With specific reference to my professional interest there have been many people who have helped with insight over that time. I owe a debt of gratitude to multiple people and organisations, and would especially mention Graham Cobb, Frank McKeon, and Laurence Trigwell, who started me on the road to being curious about the banking sector. I hope I have done them proud.

In later times, David Cummings of Tilney has been helpful in our discussions on the use of AI in wealth management, Gary Nuttall on the use of Blockchain, and Francesca Smith on the topic of Open Banking. Any weaknesses in my interpretation and understanding are entirely down to me, not to them. Craig Bedell, formerly of IBM, has also been a constant support.

There is such a wealth of information openly available that it's impossible to mention everyone, but I would like to pay particular regard to Doug Shillito at OnlyStrategic, who has provided a valuable source of insight and stimulation. With regard to everyone else, I've referenced my text for all of them to the best of my ability and I'm hopeful none have slipped through the net over the past two years, but if so I will be delighted to acknowledge them in later editions.

Throughout this book, various companies and products are referenced by way of illustration. These companies are mentioned without specific recommendation by me and readers are encouraged to make their own personal research. I have no commercial interest in any of them. Beyond this, the appendix also refers to various start-ups, but these are included for illustrative purposes only in terms of capability or longevity.

Thank you also especially to Gemma Valler and the team at Wiley, including Elisha Benjamin (Benji) and Gladys Ganaden (Syd), and the rest of the ‘hidden army’ who make stuff happen.

And finally, of course, to my family, especially my wife, Michelle, for her observations and advice, and leaving me in no doubt as to the meaning of ‘better half’.

Tony Boobier is a former worldwide executive focusing on the application of technology for the financial services sector. With over 30 years of experience, he is a frequent writer and international public speaker. He possesses a deep understanding of how to apply business intelligence and analytics to enhance the management and delivery of products and services in numerous industries.

A recognised expert in customer analytics, risk, and operational effectiveness, he is a strong advocate for enterprise-wide analytics and the use of AI to improve service and reduce cost.

Qualified in engineering, marketing, insurance, and supply chain management, he is also the author of Analytics for Insurance: The Real Business of Big Data and Advanced Analytics and AI: Impact, Implementation, and the Future of Work. He lives near London, UK.

At face value, addressing the two topics of artificial intelligence and banking in a single book might seem to be a challenging undertaking for both the reader and the writer. Artificial intelligence (AI) is an expression widely and extensively misused to represent what is, in many cases, the use of advanced analytics. Banking similarly is a generic expression for financial transactions of many types, and there are many different types of banks that are already using or need to use analytical approaches to run their businesses profitably. To effectively understand the interaction of both banking and analytics requires a knowledge of both even at a rudimentary level.

AI and the Future of Banking considers the many types of banking and how they use advanced analytics and artificial intelligence. It is predicted that by the mid-2020s, half of all businesses, including banks, will be using intelligent, self-learning systems. The banking industry is at the forefront of investigating and using advanced analytics, cognitive analytics and AI in a broad range of applications, including customer analytics, operational efficiency, risk management and providing wealth advice for clients.

This book aims to allow for the varying depth of knowledge of readers. Some will have considerable insight, whereas others will have limited or no experience. Some readers may be experienced in banking but have little knowledge of the topic of AI and advanced analytics. Others may be analytical experts with minimal knowledge of the banking industry. In either case, some readers may already be mature practitioners wishing to expand their knowledge, whereas others might be those at the start of their careers trying to gain insight before committing themselves to a professional pathway. AI and the Future of Banking aims to provide new and established industry professionals with the essential information on the implications of data and analytics on their roles, responsibilities and personal career development.

The aim of this book is not to provide a detailed and complex technical manual but rather a reader-friendly guide that is readily understood by any banking professional with limited or no IT background. Equally it will help IT professionals entering the banking industry to understand some of the many different facets of such a diverse industry.

One of the main issues for many senior professionals in financial services is that of technology advancing more quickly than their own personal learning. Some organisations are supportive in that they provide adequate training, perhaps in the form of continuing professional development. For others, some employers will expect understanding and self-learning at an individual level, whereas in reality some individual employees are being left behind by jargon, the pace of change and an inability to find a single source of work that is comprehensive, relevant and relatively clear in the use of language. For that particular group it's not just a case of ‘old dogs learning new tricks’ but rather that today's professional needs to be aware of the issues of the developing marketplace, perhaps more than ever before. To fail to be up to date means at least three things: professional irrelevance and redundancy; inability to add value to their organisation; and becoming a victim of change rather than an active contributor.

This book has been organised into three main sections:

1. The first considers banking as an industry that invites us to consider the meaning of money and its digital transformation, and the importance of both.
2. The second investigates AI and advanced analytics, which invites readers to reflect on the entire ‘data agenda’.
3. The third explores the future of banking itself, where we will not only be provocatively futuristic but also consider the road to the future by looking at some of the issues of implementation.

This approach will enable readers to ‘dip in’ where it is most appropriate for them at a personal level, although hopefully the other sections will also be worthy of examination. To do this, we will try to keep away from industry jargon, abbreviations and any duplications wherever possible.

In terms of the specifics of the book itself, the first three chapters are foundational and aim to consolidate the reader's existing knowledge and at the same time encourage them to think about the future of banking and the impact of AI. Chapter 1 provides an insight into the evolution of money to what has now become perhaps no more than a form of digital commodity in a near-cashless society, and offers the reader an understanding about current banking roles and the likely impact of AI on these in the future. Chapter 2 considers current imperatives within the banking industry, comparing and contrasting them to imperatives in other key industries of retail, telecom and healthcare and suggests a set of future imperatives for the banking industry going forward. Chapter 3 is a data and analytics ‘primer’ to help readers understand not only the hierarchy of analytics but how value is extracted from data.

The next three chapters take the reader deeper into the subject of advanced analytics and AI specifically for the banking industry. Chapter 4 discusses the key elements of banking analytics, covering issues such as financial performance management, customer analytics, risk management and operational efficiency, and gives readers a strong insight into the importance and current usage of analytics for banking. Content is organised by imperative rather than type of bank. Chapter 5 takes the insight to a higher level, providing a background to the development of the concept of AI and then leading on to machine learning and its applications, including apps used in banking. Chapter 6 focuses more specifically on AI and the importance of branding in banking. The chapter links strongly to the customer analytics element of AI. It recognises that different generations currently have different expectations of banks and that these will be fulfilled by both the brand and ultimately by the bank's service extension. The chapter paints a picture of banks getting much closer to the consumer through AI and considers the issues involved.

Chapters 7 and 8 are about change at a personal and organisational level. Chapter 7 considers the impact of AI on issues of leadership and employee transformation and discusses leadership in an AI-infused age, the attributes of AI-infused leaders, training and personal coping strategies. It also deals with the evolution of the banking employee and creates a persona for a banking employee of the future. Chapter 8 is about how banks might change physically, especially at branch level, and gives five scenarios for typical Banks of the Future, including transformation of the investment bank.

Chapter 9 deals with the topics of Open Banking and Blockchain, both of which are major issues in the banking industry in their own right and which will be affected by the impact of AI. The chapter also considers the impact of banking expansion in other continents.

Chapter 10 looks at issues of innovation and implementation, broadly considering topics such as new job roles, bootcamps and how banks work with Fintech companies. It also reflects on why innovation and implementation fail and provides possible mitigation strategies. Chapter 11 rounds off with the difficult area of cybercrime, recognising that its management is a critical factor in the implementation of AI. It provides a broad explanation of the problem together with mitigating tactics, and concludes by looking specifically at the use of analytics and AI in banking fraud.

The appendix provides a list of over 100 Fintech companies, without recommendation, but in order to illustrate the breadth and depth of AI-type start-ups in the banking area at the current time.

Overall, the book aims to provide a heavily referenced, informative and up-to-date resource for bank executives, managers, new entrants to the banking industry, financial technology and financial services practitioners and students on postgraduate finance and banking courses.

There's no hiding the fact that there is already an abundance of information out there that is readily accessible online, and where possible online links are shown in the references for personal learning. Not everyone has the privilege and ability for such levels of access; others do not know where to start their search and the rest just simply won't have the time. If the industry recognises that information is critical to the future, the other side of the coin is that there is too much information. It's sometimes a battle to find out what to look for and where to search, and to be comfortable that the information obtained is both realistic and impartial, especially from technology vendors. This book, which is vendor agnostic, will hopefully provide trusted and impartial advice. The entire topic of AI and the Future of Banking is not a definitive statement of the eventual outcome of the industry but simply part of a more expansive journey on which we are all travellers.

The depth and breadth of each of the three areas of AI, banking and human engagement means, inevitably, that there needs to be some intellectual trade-off, with certain assumptions being made regarding knowledge and understanding, and for this the author begs forgiveness in anticipation. However, there must be a starting point, and in this case it is one of assuming that the reader has little or no knowledge in any or all of the sectors.

If managing these three areas is not difficult enough in itself, a fourth element will also be introduced, one of time itself, as the future of banking is considered. To do this effectively, it's important not only to think about what will happen but what has happened in the past that has provided us with the banking industry that currently exists. Not only will we try to consider how technology will change the operation of banking but also how changing consumer demands – evident in retail purchasing for example – will mould the future shape of the industry. Where appropriate, examples of best practice will be provided by way of proof points that are already in the public domain.

Even at this stage, it is tempting to make the bold statement that all banking will be infused with AI to some degree within the foreseeable future, but one big issue to address is how the industry will get there from a practical point of view. What are the challenges of implementation and what are the possible solutions? Do they rest in external organisations like start-ups in the Fintech community, or can banks innovate internally themselves? In either case, what are the key building blocks of change? How quickly might all this happen, and how is change resisted at an organisational level?

As a caveat, it should also be recognised that the future of banking is not just all about analytics and AI, although these will play a major part. It is important to reflect on some of the other contributing factors of change, such as those of customers' behaviour and their greater expectations, as well as advances in other industries that will inevitably have a ‘knock-on’ effect.