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A conversation with Maurice Lisi: Regulations are used as an excuse. The real disruption is around the corner and banks will have to make changes in order to survive

Which roles in banks will prevail and which not, are regulations actually challenges or enablers of the financial tech revolution and what does hyperpersonalization in banking really mean

A conversation with Maurice Lisi: Regulations are used as an excuse. The real disruption is around the corner and banks will have to make changes in order to survive

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Uncategorized
March 3, 2024

In the last decade, the introduction and popularity of mobile banking have decreased the number of branches by 38% and the number of bank employees by 32%. This statistic has been highlighted by Maurice Lisi, Head of Digital Business at BPER Banca Italy, and serves as a great example of how the banking industry is swiftly changing.

There is no better expert to discuss how AI will transform the industry. With almost 20 years of experience in financial services, Lisi is a specialist in digital transformation. So, we sat down to talk to him about important FinTech issues and his upcoming MoMo talk.

1. Last year our audience had a chance to hear an important message from you, namely that as the customer expectations are moving towards less costly and more digital services, they do not exclude the human experience of seeking a solution in a traditional bank. You highlight this balance of technological innovation and digitalization of banks on one side and the human contact on the other on numerous other occasions. Could you elaborate the main premises behind this message? What is it, according to your own experience and insights, that the end customer needs from one and what from the other?

Customers now seek digital experiences for routine tasks like payments and deposits, considering them as commodities. Technology plays a crucial role in handling these efficiently. You don’t need human interaction to transfer money; you just need it to be completely frictionless. On the other hand, when you are about to sign a mortgage, you are making a deal that will stay with you for the next 20 years. Similarly, when discussing life insurance and trying to protect your liabilities and your kids, human interactions are necessary. For more intricate financial matters, customers still value the human touch provided by advisors. Nowadays, striking a balance is essential – leveraging technology for seamless routine services while reserving human interaction for advisory sessions. This approach aligns with the evolving expectations of customers, ensuring both efficiency and depth in service delivery. 

2. The bank of the future, according to your own words, cannot just be an institution with technological solutions to digital transactions, rather it will be right what it is now but will need competencies that still do not exist. You posed interesting questions then like who is the future risk or fraud manager of tomorrow – do you have an answer yourself today?

The narrative of the future bank is swiftly changing. Several roles within banks today may not persist in the next five years due to the increasing influence of AI, particularly in process automation and robot process automation. While banks currently invest considerable time in training and retaining these human roles, the next five years are expected to bring a transformation as AI supports new skills and job functions. The transition is anticipated to occur in two phases: initially, AI will complement human skills, and subsequently, for the majority of roles, AI is likely to replace humans. This shift is driven by the precision and reduced margin of error offered by AI compared to humans. The transformation will result in a shift in skills requirements, moving from expertise in traditional security roles to proficiency in data science and AI models. 

3. Banking, financial services, and insurance are already the second largest user of AI solutions compared to other industries, according to the latest S&P Global report. Prediction and recommendation models are the most widely spread use cases of AI technology in banking and other financial institutions. Where do you see the greatest potential for AI enabled solutions in banks?

AI’s impact on banking is poised to be transformative, similar to the automation seen in manufacturing. Traditional banking, rooted in branches and paper-intensive processes, has already seen significant changes with the arrival and popularity of mobile banking, resulting in a 38% reduction in branches and 32% in banking employees over a decade. The next wave of transformation involves AI, particularly in human-intensive areas like risk, fraud, and lending. This disruption will be unprecedented, requiring banks to undergo substantial changes to remain sustainable and profitable. Waiting for regulatory intervention is not a viable strategy, and banks must proactively embrace AI, adapt their organizations, and acquire new talent aligned with a long-term strategy to thrive in the evolving landscape.

4. One of the predictions of the report, in terms of the most likely application of AI in banks, is the business franchise differentiation. In other words, artificial intelligence will allow for banks to further personalize their offers and thus boost customer retention. Your talk in Money Motion will be on the topic of hyperpersonalization in banking. Give us a sneak peek. 

Yes, in the last five years, banks have been adopting technology but still approaching customers traditionally, just changing the communication channel. For example, you might receive emails or mobile pop-ups suggesting products that aren’t relevant to you because banks rely on periodic targeting campaigns. However, the move towards hyperpersonalization in banking aims to change this approach. It involves understanding consumer behavior in real-time and providing tailored information instantly. With the use of AI, banks can leverage vast amounts of customer data to offer personalized products and services at the right moment. This goes beyond traditional CRM approaches, using technology to connect with customers through various channels for personalized offers.

5. Going back to your appearance for the leading Italian newspaper, Laura Grassi, a colleague from the Politecnico di Milano who will also join the MoMo2024 stage, commented how despite the customer desire to have a banking experience as seamless as that of watching Netflix and the willingness of banks to adapt their infrastructure and offers, we shouldn’t forget that the world of banks is the world of heavy regulations. What do you expect to be the leading challenges in terms of regulations and law in the further advancement of banking technologies?

Regulation, in my opinion, is often used as an excuse in banking. The challenge lies in a legacy mindset where compliance and legal teams, when faced with regulatory barriers, might not fully comprehend the possibilities. While regulations have both positive and negative aspects in banking, they act as a protective shield against disruptions. FinTechs, for instance, haven’t easily disrupted the banking sector due to regulatory protection. Regulations have evolved to facilitate digital transformations, allowing for experiences like digital signatures and remote operations. The key obstacle is the banking sector’s readiness and willingness to undergo the necessary transformation, as regulations often enable rather than obstruct progress. 

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At Mastercard, we strive to connect and power an inclusive digital economy that benefits everyone, everywhere. For almost 60 years, leveraging our global innovations capability, we work to digitize payment services across all channels and devices. Delivering payment value where speed, security and convenience matter most, and digital solutions solving consumers’, small and large businesses’ needs. Building trust in a digital world and embedding our social impact initiatives and ESG commitments into our core. Connecting everyone to priceless possibilities.

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(coming soon)

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