This Time Is Different: Why AI Is Unlike Any Wave I Have Seen In 40 Years Of Financial Services
AI will fundamentally rewrite the global financial value chain, making marginal operating costs near-zero and creating highly personalized, previously impossible products, argues guest columnist Nigel Morris of QED Investors. He warns that success will depend on whether incumbent banks and fintechs are willing to self-cannibalize and rebuild their operations around this transformative technology. Guest Author By Nigel Morris I have spent more than 40 years in financial services, and I have learned to be skeptical of people heralding the word "revolution."
Key Takeaways
- Branchless banking was going to end the branch.
The blockchain was going to disintermediate the whole system.
- Then digitization moved that screen into the customer's pocket, unlocking all banking services with a mere touch stroke.
Then the cloud collapsed the cost of computing and let a handful of engineers do what once took a data center and an army.
- Filing taxes is being reenvisioned by companies like April .
AI neobanks like Chime and Albert are automating more pieces of the consumer banking relationship.
- Layer by layer, the financial system will be systematically uprooted by AI, each piece first made faster and cheaper, then reinvented from the ground up.
Zero marginal costs The first thing AI does is brutal and simple.
- At Capital One we sought to deliver the right product to the right customer at the right price at the right time, which was always something of an exaggeration, because all we really had was direct mail and statistical inference.
Stats & Key Facts
- #Capital One's insurgency 30 years ago proved that a one-size-fits-all model breaks the moment marginal economics lets you price and serve customers individually.
Branchless banking was going to end the branch. The blockchain was going to disintermediate the whole system. Big Tech was going to extinguish the bank altogether.
However, consider the most meaningful waves of financial services innovation this generation. The information-based strategy we pioneered at Capital One turned data into the engine of a consumer bank, reimagining it from the inside. Then the internet dissolved the branch as the unit of distribution, putting the bank on a screen.
Then digitization moved that screen into the customer's pocket, unlocking all banking services with a mere touch stroke. Then the cloud collapsed the cost of computing and let a handful of engineers do what once took a data center and an army. AI will be bigger than all of these waves.
For more details please read the original article at Crunchbase News.
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