Publications

Publications

Report: The New Physics of Financial Services – How Artificial Intelligence is Transforming the Financial Ecosystem

Report: The New Physics of Financial Services – How Artificial Intelligence is Transforming the Financial Ecosystem

The New Physics of Financial Services: Understanding how Artificial Intelligence is transforming the financial ecosystem, studies the strategic, operational, regulatory and societal implications of AI on the financial services industry, exploring six core sectors to bring clarity to this often sensationalised debate and  help the industry look forward. 

The report finds that Artificial intelligence is changing the physics of financial services, weakening the bonds that have held together the component parts of incumbent financial institutions and opening the door to entirely new operating models.

The report highlights nine key findings that describe the impact, which include:

  • From cost centre to profit centre: Institutions will turn AI-enabled back-office operations into external services, both accelerating the rate at which these capabilities improve and necessitating others to become consumers of those capabilities to avoid falling behind
  • A new battlefield for customer loyalty: As past methods of differentiation erode, AI presents an opportunity for institutions to escape a "race to the bottom" in price competition by introducing new ways to distinguish themselves to customers
  • Self-driving finance: Future customer experiences will be centered around AI, which automates much of customers’ financial lives and improves their financial outcomes
  • Finding a balanced approach to talent: Talent transformation will be the most challenging speed limit on institutions’ implementations of AI, putting at risk the competitive positioning of firms and geographies that fail to effectively transition talent alongside technology
  • And many others…