The document discusses the potential for artificial intelligence (AI) to transform the banking industry by serving as the "brain" for banks. It describes how AI could automate many of the repetitive mental tasks involved in banking like memory, logic, and calculation. This would allow banks to offer a far superior customer experience by streamlining processes like obtaining a home loan. The document also suggests that AI, coupled with automated processes and a centralized digital nervous system, could define the future of banking technology by making all bank operations faster, more efficient, and continuously self-improving.

1. Can you imagine a
bank with a brain?
For more information, call Mac Walker, Client Engagement Manager, on +61 417 466 041. CSC is a global leader in next-generation IT services, the company’s mission is to
enable superior returns on our clients’ technology investments through best-in-class industry solutions, domain expertise and global scale. Visit us at www.csc.com.
Australian headquarters: 26 Talavera Road Macquarie Park, Sydney NSW 2113 Australia +61 (2) 9034 3000 © 2016 Computer Sciences Corporation. All rights reserved

2.
It seems we are at the end of a long 40-year
cycle in banking technology, and witnesses to
the birth of another. Exciting times.
To understand the last technology cycle we
can compare it to a series of major organ
transplants. Think of the heart being taken
out of the ‘corporate’ body and replaced with
a technical organ in a box with blinking lights.
Turns out, this ‘technology heart’ could pump
blood more efficiently than the old flesh one.
Once early experiments in electronic data
processing showed a healthy return-on-in-
vestment, all the bank’s ‘organs’ were des-
tined for a technological replacement.
And so the technology departments grew.
Furthermore they, and their vendors, contin-
ued to grow when it was realised that keep-
ing these vital organs in good working order
took constant and diligent care of many staff.
As it grew, technology became so critical to a
bank’s operations, that if it were turned off,
no bank could stay in business for very long.
However, since nearly all operations in Aus-
tralian banking are already mediated by tech-
nology, replacing old systems with new ones
generates much smaller incremental benefits.
The only corporate organ not already re-
placed with technology is its brain. We are, of
course, talking about Artificial Intelligence
(AI), the ability for technology to use data to
learn, think and make informed decisions.
In the previous industrial revolution, ma-
chines replaced muscles. Applied to repeti-
tive tasks, machines proved to be more effi-
cient than humans, this allowed (or com-
pelled) humans to migrate from physical
labour to less tiring and more valuable tasks.
In the same way, the coming AI revolution
will assist with those activities that our brains
find tiring, which I categorise as: 1) memory
(remembering details), 2) logic (the process-
es that get us what we want) and 3) calcula-
tion (the computation of figures).
Customers, staff, partners and regulators
tell us that dealing with a bank takes mind
numbing doses of memory, logic and calcula-
tion. Given a choice, people will naturally
gravitate to the bank that minimises the men-
tal stress of banking. Therefore I think im-
proving customer experience is the reason
that the various components of AI (like intent
management, perceptrons, neural nets or
backpropagation) must become banking’s
principal source of competitive advantage.
It is a challenge to imagine a how a bank
with an AI brain operates, so lets apply it to
banks most important product, home loans.
In Bank A, a customer must calculate how
much they can borrow by themselves. They
choose a lawyer and work though lenders to
find the best rates. If that lender happens to
be their main financial institution, the cus-
tomer is even asked to calculate their own
monthly expenses using the bank’s data. Af-
ter submitting a form, the customer then suf-
fers a nerve racking wait as the bank grinds
through the processes of establishing, or re-
jecting the home loan application.
Now imagine Bank B; the customer takes a
picture of their ideal property on their phone;
an AI recognises that home from location and
the photo. The AI holds a memory of data like
the value of the property the customer’s as-
sets, liabilities, credit score and risk profile.
The AI could therefore calculate the size and
rate of the loan, and manage the logic of the
banks loan process, the conveyancing and the
establishment of a loan. Could all of this be
done for the customer in under a second?
Which banks would you choose: A or B?
Bank A and B differ in another way.
Bank A has many manual ‘swivel chair’ pro-
cesses that (despite billions of dollars in
technology investment), gives it 19th century
reaction speeds in the 21st century.
A look at Bank B’s operations, reveals that
all processes have been automated. Not just
business processes, but technical processes
like testing, or infrastructure, and operations
like risk are governed by a centralised AI that
self-learns and improves itself constantly.
In the same way the brain controls the
body via a nervous system, I liken this au-
tomation to building a new digital nervous
system. These automated processes must be
the precursor to building the AI driven bank.
So could a governing AI managing auto-
mated processes define the future of banking
and bank technology? We would be happy to
discuss this proposition with you.
BUILDING a BANK’S BRAIN & NERVOUS SYSTEM
For more information, call Mac Walker, Client Engagement Manager, on +61 417 466 041. CSC is a global leader in next-generation IT services, the company’s mission is to
enable superior returns on our clients’ technology investments through best-in-class industry solutions, domain expertise and global scale. Visit us at www.csc.com.
Australian headquarters: 26 Talavera Road Macquarie Park, Sydney NSW 2113 Australia +61 (2) 9034 3000 © 2016 Computer Sciences Corporation. All rights reserved