From Las Vegas to Bangkok: Digital Banking Insights from Google Cloud Next and Money20/20 Asia

AI is developing rapidly and the financial sector will experience a similar transformation as the internet once did. People are already talking about the third revolution, after the first through the internet and the second through the mobile age. AI is not only advancing rapidly in technological terms, its penetration is also accelerating. AI is already being used in many areas of the financial industry today and will turn entire value chains upside down in the future. 

The status quo is four main areas of application for AI: Firstly, chatbots continue to be a key topic, particularly in the area of customer service. Secondly, the consolidation of extensive information through LLMs and thus even better customer advice. Thirdly, the use of AI for marketing purposes, video and text creation and email communication. Fourthly, AI-based support for software development. And, fifthly, AI-assisted software development.  

In order to be able to use AI in established banks, they must first do their homework and reduce their technical debt. This has grown in many organizations over years and decades. IT systems are no longer just a cost factor, but have long been at the heart of service provision. An organization’s ability to use AI today says a lot about the state of its IT systems.

It is important that employees are involved in their tasks. And that the bank provides scope and resources for this. AI can be used for almost everything, but not all at once at the beginning. That’s why it’s important to start with a clear focus and not use AI in all areas immediately. In order to get all employees on board, it is important to integrate AI applications into everyday working life, for example via platforms such as Google Workspace or Microsoft Suite. This familiarizes employees with the applications and generates ideas for the further development and use of AI. The competence and expertise of employees is therefore crucial for a broader use of AI. Even at management level, it is important to make time and resources available for further training.

Of course, not everyone can freely program AI in banks. This requires standards that can only be introduced gradually. Some banks use digital banking insight-down approaches to find out which areas should be disrupted and then develop concepts and standards. This can take some time, but is ultimately promising. Regulatory authorities should support companies and investments, promote innovation and at the same time ensure security and accessibility. Even if these demands were formulated for Asia, they basically apply equally to Germany. Ethics and compliance are also crucial for the use of AI and need to be developed further. One interesting point was that, according to a speaker from China, AI (=爱) also means “love”, which is an amusing comment on the discussion about ethics and AI. 

And now we come to the digital bankinginsights beyond AI. 

An exciting insight for us: Europe is far ahead of the USA when it comes to regulating digital identities. The US looks to Europe with respect, especially Germany, which has created a clear framework for this. These clear guidelines enable all market participants to understand what is at stake and to act accordingly. In the USA, on the other hand, there is still a great deal of uncertainty and people are keeping a close eye on what is happening in Europe in the hope of perhaps adapting to it at some point. However, this process will certainly take several years.  

We met banks on both continents that are already using Google Cloud. We found that they are all aware of the regulatory and data protection challenges that this technology brings. Nevertheless, they unanimously emphasize the possibility of meeting these challenges by implementing high security standards. It is clear that banks are carefully weighing up not only the opportunities but also the risks of using the cloud. The often quoted sentence: “Yes, BaFin allows it!” fits in with this. The German financial market supervisory authority updated its regulations on banking in the cloud at the beginning of the year. 

We have learned that many financial market players in Asia look at Europe with interest and sometimes envy, especially because of the uniform EU regulation and the central supervisory authorities for the whole of Europe and the EU member states. In contrast, there is no comparable uniform regulation in Asia, so startups have to comply with new regulation every time they expand into other markets as fintech companies. In addition, the euro is of crucial importance as the common currency in Europe. The hurdles for expansion within the Asian region are therefore significantly higher. 

Cooperation between fintechs and banks has long since become the norm. In the competition between banks, there is therefore also a battle for those fintechs that can offer bank customers added value and thus strengthen the bank’s position. Especially during the conference in Bangkok, we realized once again that successful fintechs can select their banking partners in a certain way. They not only pay attention to branding, image or marketing, but above all to the speed of technical integration. After all, speed is of the essence for start-ups.

As already mentioned, clear regulation can be a locational advantage and even inspire admiration. In our democracy, regulation is the result of a regulated balance of interests. Criticizing excessive regulation is therefore almost part and parcel of public statements by German bank CEOs. The mentality we have experienced in the USA is completely different. The motto there is: “Don’t fight against regulation!  Accept and simply implement.” You implement what is possible, and what is not possible is simply not implemented. We found this approach extremely refreshing.

Our journey from the dazzling lights of Las Vegas to the vibrant metropolis of Bangkok has brought us a wealth of insights and inspiration far beyond the conference rooms. 

At a time when AI is being hailed as the next big revolution, we have seen that progress does not come without challenges and critical questioning. Technological innovations must not only be implemented, but also integrated into existing structures and supported by everyone involved. Clear standards, comprehensive training and continuous adjustments are necessary in order to quickly and fully exploit the opportunities offered by AI.

But beyond the AI hype, there are equally important developments and trends that are shaping the world of finance. Be it Europe’s pioneering role in the regulation of digital identities, the challenges and opportunities of cloud use in banking or the admired uniformity of EU regulation – these topics show that innovation has many facets and takes place at different levels.

Cooperation between fintechs and banks, the acceptance of clear regulation and the need to reduce technical debt are just some of the areas that will be crucial in the coming years.

Ultimately, it’s about finding the right balance – between technological progress and human adaptability, between global trends and local circumstances, between innovation and regulation. We are excited to see what the future holds and how these trends will develop. One thing is certain: the journey continues and we are ready to tackle the next challenges and opportunities with curiosity and determination.