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January 05, 2022

Will the Future of Banking be Shaped by Artificial Intelligence?

Artificial intelligence
(AI) is the simulation of human intelligence via machines and is unquestionably one of the most groundbreaking and disruptive technologies the world has ever seen. It will significantly affect our way of life, and failure on the part of financial institutions to take notice and adapt accordingly could be detrimental to their overall growth and success. While debates around the effects of AI on society continue, there is no doubt that AI is here to stay, and companies will have to incorporate the technology into their daily operations if they are to remain competitive.  

How AI Will Affect Banking 

AI is playing — and will continue to play — a significant role in the efficiency, profitability, and competitiveness of financial institutions (FIs). Clients today are more sophisticated and digitally inclined than ever before, and they are moving away from the more traditional face-to-face generic interaction with their bankers and advisers. Instead, they are going into banks less and they are demanding more automated personalized solutions at their fingertips. They are looking for the ease and convenience of doing their banking transactions digitally.  

Growing Demand for Fast, Automated, and Convenient Solutions 

The ongoing pandemic has further escalated this trend, with more people growing accustomed to doing everything online. For the past two years, most have been working remotely, going to school and meetings online, banking online, shopping online, and more. A white paper report titled “Bank of the Future” found that the pandemic has increased consumer demand for personalized digital and mobile-first financial services.  

The report further found that traditional banks are no longer the go-to for clients looking to manage their savings and investments. Instead, banks with a fintech-style digital component offering a better customer experience are generating more interest. The report also touched on the open banking regulations adopted by U.K. banks, which now facilitate the open sharing of vast data that can be utilized via AI technology to provide invaluable customer insights and opportunities. The report further estimates that AI could generate up to $1 trillion of additional value each year for the global banking industry.  

With this growing digitization trend, banks must adapt to the changing, diverse needs of their customers to remain competitive. They must offer the more personalized solutions being demanded by clients. Banks must transform digitally and will have to invest in AI, machine learning, and other infrastructure necessary to provide fast, instant, and tailor-made solutions.  

Sparkasse Bank Malta Is Taking Notice 

Sparkasse Bank Malta is aware of this trend and is adjusting to the changing needs of clients. “At Sparkasse Bank Malta we continue to invest heavily in infrastructure, technology, and other tools necessary to help drive us forward in our quest for increased market share in the investment services space,” said Paul Mifsud, CEO of Sparkasse Bank. Sparkasse Bank Malta also launched a new website and invested in new IT software to improve their automation processes and operational efficiency.  

Digital Trail Providing Big Data  

We continuously leave digital trails via our browsing, social media, and online shopping trends, and banks using AI technology can tap into that data to help them determine client objectives, spending habits, lifestyle, interests, risk tolerance, and more. This digital trail also allows for more tailor-made client solutions that banks can utilize via AI to put the most suitable products and services in front of prospects. 

Financial institutions such as Sparkasse Bank Malta are already embracing AI to help their advisers and planners provide tailor-made solutions catering to the diverse needs of their clients. “For us at Sparkasse Bank Malta, where we are heavily focused on providing top-notch investment services, AI technology simply cannot be ignored,” said Paul Mifsud. 

Benefits of AI 

AI can quickly access massive amounts of data, analyzing performances, risks, returns, and trends to predict market movements. 

Prospects with smaller budgets may feel more comfortable going online and using an AI robo-adviser to set up a financial plan with much lower fees.  

AI could help financial institutions attract more millennials who tend to prefer less face-to-face interaction and more automation for money-related matters. 

AI could help FIs attract more clients and increase customer engagement. 

AI will help FIs more easily detect and prevent fraud. 

Finance Professionals still needed 

Some experts suggest that AI could eventually replace the need for finance professionals; however, financial institutions need not see AI as a threat. Instead, the technology should be seen as a complementary business tool that can be utilized to reduce the cumbersome, grimy, compliance work up front, leaving advisers more time to manage, build and develop intricate relationships with their clients. Sparkasse Bank Malta embraces AI. “We are one of the few banks that still prioritize establishing long-term relationships with its customers. We foster relationship banking, focused on service,” said Paul Mifsud, Sparkasse’s CEO. AI will enable FIs like Sparkasse Bank to sift through massive amounts of data, gathering the invaluable insights necessary to provide tailor-made client solutions. 

About Sparkasse Bank Malta 

Sparkasse Bank Malta plc, established in 2000, has been operating in Malta for over two decades, offering private banking, depositary, and custody services to its growing clientele. Sparkasse provides investment services under its Investment Firms License, issued by the Malta Financial Services Authority. It offers a wide variety of investment services, including advisory and non-advisory services, execution, settlement services, and custody. Sparkasse Bank Malta is licensed as a credit institution via the Banking Act and as an investment firm and depositary via the Investment Services Act.

Paul Mifsud, CEO of Sparkasse Bank Malta, was appointed in 2007 and has been overseeing its operations since. Sparkasse’s banking and investment services are geared mainly toward corporate entities, private customers, and fund asset managers. The bank currently has roughly$8.8 billion of assets under custody. Sparkasse’s Custody Division offers high-quality custodian and securities services to foreign institutional investors, professional investor funds, fund of fund managers, financial institutions, domestic mutual funds, corporate investors, high net worth investors, and brokers. Sparkasse Bank’s vision is to grow their enterprise into a recognized European financial institution as a top provider of banking, investment, depositary, and fund custody services, excelling in service and expertise.

To learn more about Sparkasse Bank Malta and how our qualified financial advisers can assist with your investment or banking needs, please contact us at (+356) 2133 5705.

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