Keith Darter discusses AI’s transformative impact on banking, balancing innovation with responsibility, and future financial strategies.
Keith, please share a bit about your background and what led you to your current role at Glassbox.
I’ve been fortunate to build a long and diverse career in the software industry, with a significant focus on organizational strategy and technology solutions tailored to the finance industry. Currently, as Global VP of Financial Services at Glassbox, I’m dedicated to driving revenue growth and crafting comprehensive customer experience strategies for our clients in this space. My path to the FSI space wasn’t entirely conventional. I began my career with a technology degree and found myself at the heart of the dot-com era, initially focusing on application design. From there, I transitioned into roles that spanned supply chain management and e-commerce. Just before I entered the finance sector, I was deeply involved in fraud risk and compliance, which played a crucial role in shaping my approach to the financial services industry. This broad tech experience, particularly in fraud risk and management, gave me a nuanced understanding of the unique challenges and needs within the FSI space. It’s this background that allows me to empathize with our customers and deliver solutions that are not only effective but also finely tuned to the specific demands of the industry.
Given your experience in organizational strategy and technology acumen, how do you see the role of AI evolving in the financial services sector over the next five years?
AI is poised to fundamentally reshape the financial services sector over the next five years, particularly in enhancing security, reliability, performance, and personalization within customer experiences. While financial institutions are projected to double their AI spend by 2027, it’s crucial that this growth is guided by strategic foresight rather than the allure of quick fixes. Without careful planning, AI initiatives risk becoming costly ventures that fail to generate sustainable ROI. At Glassbox, we recently conducted a survey that revealed 60% of consumers perceive AI as both an opportunity and a risk. This duality underscores the importance of thoughtful AI implementation, especially in critical areas like fraud detection and customer interactions. The key to success lies in addressing these challenges head-on, with a focus on ethical AI usage and maintaining a seamless, human-centered customer experience.
When integrated effectively, AI has the potential to revolutionize financial services by streamlining operations, enhancing customer support, and delivering actionable insights. This will lead to a more responsive, secure, and personalized digital banking environment – one that meets the evolving expectations of today’s consumers while safeguarding their trust.
The findings of your recent report call for AI caution, do you believe AI integration in banking and finance is happening too fast?
Speed must be balanced with responsibility in AI integration. Moving too fast could place financial institutions at risk of losing the revenue they need in today’s economic climate. Financial institutions need to invest in the compliance, usability, and reliability of their application and data management systems. Our recent study shows, 66% of U.S. consumers want a consistent, seamless experience across their bank’s app and website. Ensuring the security and usability of digital solutions is crucial for long-term customer retention and acquisition.
Financial institutions must strike a balance between leveraging AI’s potential and mitigating its risks. This involves adhering to ethical and legal frameworks, ensuring regulatory compliance, and adopting responsible AI practices such as transparency, bias mitigation, and data privacy protection. By taking these measures, companies can confidently integrate AI while maintaining customer trust and addressing concerns over the technology’s risks and unintended consequences. Finding this equilibrium allows institutions to harness AI’s transformative capabilities responsibly and ethically, benefiting both themselves and their customers.
AI is still for many an experimental technology. Do you believe frameworks such as the NIST AI RFM (risk management framework) are a good starting point for banking leaders to safely deploy AI?
Yes, leveraging such frameworks as the NIST AI Risk Management Framework (RFM) is a necessary starting point for banking leaders seeking to deploy AI safely. As indicated in our FSI study, over 50% say security is an extreme priority for digital banking. These frameworks offer structured risk management by identifying and addressing risks such as privacy concerns and cybersecurity threads. They also ensure ethical AI deployment; businesses must align AI practices with existing regulations and establish a governance structure for proper oversight and ongoing monitoring. By leveraging these frameworks, banking leaders can integrate AI into their operations, while maximizing its benefits and minimizing potential risks.
The Glassbox survey revealed that 85% of consumers expect proactive communications from their banks about how they’re using AI, and more than half of consumers would leave their banks if they were victims of AI-related fraud. How should bank leaders react to this finding?
To effectively address the report’s findings, bank leaders must adopt a strategy centered on transparent communication. This involves providing proactive updates on how AI is being used to enhance the banking experience (e.g., how it aids fraud detection and improves customer experience) and conducting regular audits and vulnerability assessments to increase AI security. The study revealed that 90% of respondents consider the security of personal information to be important or extremely important. Therefore, prioritizing data privacy and explaining how customer information is anonymized and protected within AI systems builds trust between both parties. By actively incorporating customer feedback to strengthen AI applications demonstrates responsiveness to meeting customer needs and commitment to continuous improvement.
This approach not only protects customers but also fosters loyalty and positions the bank as a responsible and customer-centric institution. Clear communication and secured management of AI-related activities are important in mitigating the risk of customer attrition due to AI-related fraud.
While fraud detection is a clear benefit of AI, what are the most exciting, untapped possibilities for AI in banking? Could AI become a proactive financial advisor, helping customers manage budgets, predict spending patterns, and even anticipate future needs?
While AI’s role in fraud detection is well-established in the banking industry, its potential extends far beyond that. One area gaining traction is personalized budget management, with 63% of respondents in the study underscoring the importance of personalization based on past activity and history. In this application, AI analyzes an individual’s spending habits and income sources to offer tailored budgeting advice. It helps set realistic financial goals and enables real-time tracking of expenses, alerting users as they approach their set limits.
Moreover, AI can be leveraged for financial forecasting, predicting future spending patterns based on historical data. This capability empowers customers to anticipate expenses more accurately and manage their finances more effectively. With 79% of respondents emphasizing the significance of consistent, high-quality customer support across digital channels, AI presents an opportunity to enhance the overall customer service experience.
By embracing these AI-driven possibilities, banks can transform the customer experience, making it more personalized, efficient, and secure. Personalized budget management and financial forecasting tools can provide customers with greater control and visibility into their finances. Simultaneously, AI-powered customer service can ensure seamless and satisfactory interactions across various digital platforms. As the banking industry continues to evolve, harnessing the power of AI in areas beyond fraud detection can revolutionize the way customers manage their money, plan for the future, and interact with their financial institutions. Ultimately, this can lead to increased customer satisfaction, loyalty, and a competitive edge for banks that successfully navigate this technological transformation.
Can you explain the generational differences that the report revealed and what these findings say about the future of banking?
As consumers increasingly rely on digital technology to manage their financial lives, they become more aware of the potential risks associated with Gen AI, particularly if it falls into the wrong hands. Interestingly, Gen Z respondents were most likely to see AI integration as more harmful than helpful. The raised awareness is not so much a generational difference but rather stems from diverse perspectives on technology adoption and its implications for financial security.
As AI-focused scams continue to rise, particularly with younger generations showing heightened sensitivity to AI risks, banks must adapt to maintain trust and satisfaction. Notably, 60% of respondents view AI as an opportunity and risk for banks. To address these concerns, banks need to prioritize transparency, security, and proactive communication. Staying compliant with consumer regulation trends is crucial. This approach will help banks build and maintain trust with their customers while leveraging AI effectively.
Given your track record of growing startups through IPOs and acquisitions, what strategic advice would you give to emerging fintech companies looking to integrate AI into their services?
For emerging fintech companies looking to integrate AI into their services, my first piece of advice is to ensure that the basics are firmly in place: compliance, usability, security, and robust data management. These elements are the bedrock upon which any successful AI initiative must be built, especially in a sector as regulated and sensitive as financial services. Skipping this step can lead to costly mistakes down the line.
Focus AI investments on enhancing security and streamlining operations to meet industry-specific needs and stand out in a competitive market. This means not just chasing the latest trends but carefully selecting AI applications that align with your strategic goals and customer expectations.
Additionally, it’s important to strike a balance between rapid innovation and operational stability. The pressure to grow quickly can be intense, but moving too fast without the right safeguards can jeopardize long-term success. The companies that thrive –whether aiming for IPOs or acquisitions–are those that innovate with care, ensuring that every new capability is integrated in a way that supports sustainable growth and strengthens overall business.
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