Artificial intelligence and Big Data have been present in every strategy presentation of financial companies for years. The Corona crisis makes it clear that banks still have a lot to do here, as Fintech founder Sandro Schmid says in an interview with finews.ch.
It is no surprise that UBS was one of the first Swiss banks to rely on the computing capacity of external server farms, the so-called cloud. As a major bank with an impressive technology budget – at least by European standards – it can make the necessary investments.
However, the market crash caused by the coronavirus pandemic has revealed that the average Swiss bank is still lagging behind in the deployment of big data and artificial intelligence. Hardly any institution, for example, has the ability to analyse client portfolios on a truly individual and regular basis and make appropriate recommendations.
Computing capacity too small
“The only thing the banks did was a YouTube video of the Chief Investment Officer and perhaps a link to a research paper,” says Sandro Schmid (picture below). “At the level of individual portfolios, clients hardly received any signals,” says the CEO of Fintech Aaaccell, which specializes in risk and asset management and has been part of the German LPA Group since this year.
This is not only the fault of the banks. The calculation of individual risks for individual clients requires computer capacity that exceeds the capabilities of many institutions.
It is only relatively recently that Swiss banks have been certain that they can actually use the cloud. A year ago, the Swiss Bankers Association published a guide on the subject, which provided the institutions with support in this regard. Nevertheless, according to Schmid, not everyone is yet convinced.
In addition, the banks may not have had enough time to implement corresponding projects. But if they are to keep up in the future, the industry must become more flexible. Nowadays, a bank can be downloaded from Amazon, says Schmid.
Not only robots
“The banks have such expensive IT and are developing so slowly”, says former consultant, who before founding his own company was the Swiss head of Centrum Bank. “If they can’t do that, how do they justify the high margins?”
Schmid does not advocate leaving customer service to the robots. But if they are not to be left behind, banks must make greater use of their capabilities.
All funds analysed
“A doctor also uses technology to make the right diagnosis,” he compares. “You can’t just look at a portfolio and think it’s healthy,” says Schmid, who has analyzed all the world’s funds and ranked them according to their sustainable performance using the “Fundtastic” technology developed by Aaaccell and LPA based on artificial intelligence.
This tool is an example of the use of technology that can be used to improve the performance of a client portfolio. Since it runs independently of the existing systems, it can also be used quickly.
Danger of flight for heirs
Either way, there will be no way around banks relying more on technology than they do today. Only in this way will the institutions be able to play out their strengths in personal customer care.
Those who fail to equip themselves to keep up with more agile competitors – be they big banks, neo-banks or tech groups – may soon find themselves in trouble. When the assets of the baby boomber generation are transferred to their children and grandchildren, the banks will have to prove themselves, otherwise these new customers will migrate.Translated with www.DeepL.com/Translator (free version)
Translated with deepl.com