Microsoft expert:

AI will turn competition in the banking industry upside down

Moeller is convinced that AI will massively lower the threshold for young companies to enter the market, among other things.

(Bild: stock.adobe.com/KolosovKonstantin)

Artificial intelligence is likely to cause upheaval in the banking industry in the coming years, according to a Microsoft expert. "Generative AI will turn the competitive situation upside down," said Martin Moeller, who heads up the AI business for financial service providers across Europe at the US software giant. 

"For example, AI will massively lower the threshold for young companies to enter the market, just as the digitalization and internet wave did decades ago," Moeller continued.

After the telecoms and media industries, financial service providers worldwide make the most use of so-called Generative AI (GenAI), which can create content based on a few keywords, such as ChatGPT from OpenAI or Gemini from Google. The main focus here is on process optimization, explains Moeller. Examples include compiling customer data from various databases in the form of an AI assistant for advisors.

AI does as much work as 700 employees
The Swedish payment service provider Klarna has been using AI from Microsoft partner OpenAI since the beginning of 2024, which performs as much work as 700 employees. The largest global asset manager, the Swiss UBS, also relies on AI. "I can see that there is scope to increase productivity and make work easier for everyone," explained UBS CEO Sergio Ermotti at a recent conference.

Business models have not yet been touched. This could change, says Moeller. GenAI accelerates innovation within banks and simultaneously lowers the costs for new providers, according to the expert. Family offices, the private asset managers of the super-rich, already represent fierce competition for private banks. In the USA in particular, many of the very wealthy no longer seek advice from traditional big banks. "With artificial intelligence, family offices can be set up or expanded very cheaply," says Moeller.

But AI doesn't just offer great potential for family offices. "Even banks that have hardly been active in wealth management up to now could use AI to enter the business without having to invest heavily in client advisors." German Landesbanken, for example, could benefit from such a move.

To each his own private banker
The advance of AI is also receiving a tailwind from changes in customer behavior. Young entrepreneurs in particular are increasingly willing to take care of their investments themselves, says Moeller. Many banks are working on using conventional AI to enable customers to independently collect information that is available in the bank and elsewhere. "Customers should have access to complex information 24 hours a day, seven days a week. Portfolio construction can also be handled by conventional AI."

What has been missing so far is advice on products or specific investment decisions. The development step expected in the next two years in so-called "agentic AI", which makes independent decisions and acts without human involvement, should open up new possibilities. Moeller is convinced that it will then be possible to have a conversation about investment options, ask questions and then have the agentic AI carry out specific actions.

According to a study by US bank Citi, banking services tailored to individual needs are likely to be widely available in the AI-supported world of tomorrow. "Anyone could have a private banker in their wallet, smartphone or portable device - and they wouldn't need to be wealthy."

A question of trust
As performance increases, trust in AI will also be built up, explained Moeller. When the first navigation systems came onto the market, everyone still looked at the road map. "Today, we trust the navigation systems. I believe that this is also where investment advice is heading."