Fintech Insider Podcast by 11:FS
00:28:09 · Ross Gallagher
[00:28:09] S5: I think there is, I don't think anybody could doubt that there is, there's almost no regulation whatsoever around AI at the moment more generally. I think again, ultimately where we get to on this in terms of Benjamin's dilemma around, is this gonna do more harm than good? Again, I think comes back to incentives. Right? I think in the early days of DeepMind, they really tried to prioritize AI safety, that being very much at the forefront of how these models got developed. They set up an AI safety coalition to try and bring all of the active players in this space together in a line behind prioritizing AI safety. It never really got off the ground because of course the incentives were around, well, who's gonna win this AI race? We've all heard Donald Trump say whoever wins AI wins, And now they're talking about these self governing coalitions. I mean, think what you will about the idea of self governing. But I think, look, the more nuanced view on that or maybe the more practical view is you know, if if if people are gonna be using some of these general purpose frontier models for how they manage their personal finances, there's so many questions I think that needs to be answered. And I think one of the the most important questions is, know, whose behalf is the agent acting on? You know, whose outcomes are the agents prioritizing? Are they prioritizing delivering good outcomes for the consumers? Are they prioritizing delivering the best possible outcome for the AI companies? You know, there's so many questions here I think that need to be addressed before we can start to get under the hood of does this get us to a place that's better off or worse off? But boy, does it have the potential.
00:29:50 · Benjamin Ensor
[00:29:50] S6: I think the fundamental challenge here is twenty, thirty years ago, financial advice and financial guidance was all quite tightly regulated in every country. And the only other people who really ever talked about financial decisions were a small number of financial journalists, right? Magazines, newspapers, and so on. Now, everyone is a publisher, right? Everyone can publish whatever they like on the Internet and that's wonderful. And there's all sorts of weird and wonderful things that everyone publishes. However, it creates this path for scammers and all sorts of bad actors. And the problem is there's no regulation of that. So the regulators have taken this sort of relatively straightforward view of, okay, we need to regulate financial services firms. Well, unfortunately, no. That's not good enough. And so there's a massive issue, not so much for regulators, but actually for legislatures and political leaders of how do we regulate AI and media more widely because is it okay for individuals to be going out and giving advice to people on, you know, whatever pyramid investment scheme or whatever they've come up with. It would be very sophisticated, very slick advice, but it completely unregulated and outside the remit of the regulator because it's not a financial services firm doing it. And so I think that's actually the biggest problem is the legislators need to really grapple with this of how you're gonna tackle this. Oh, and just to make it more complicated, let's throw an extraterritoriality as you just alluded to. If these AI models are coming out of China or The United States and you're in Canada or Ghana or Australia or wherever, well, can your regulator really do very much to prevent the actions being done by an AI company in a completely different country on the other side of the world. So that's one heck of a big issue. And that's why I see this as having potential for huge harm because the regulators don't necessarily have the tools they need to prevent harm to people in their countries from bad actors in other countries.
00:31:50 · Sarah Kocianski, Kate Moody
[00:31:50] S4: It's certainly a very big topic and not one that's, you know, unique to any particular country, region, or otherwise, as you suggest. So I'm sure that we're gonna be hearing a lot more about that, over the coming months and years. [00:32:04] S2: You can just wave your magic wand, though. Right? You can just fix it right now. [00:32:07] S4: Oh my. I tell you what. There's other things that would be higher on my list first. Right. We've heard about three very different wishes today, but making them come true, as we've discussed, is not gonna be quite so simple. So let's talk a little bit about what's actually standing in the way. So we've alluded to to some of these areas already, but we've talked about better incentives for banks. We've talked about making money easier to talk about, and we've talked about ensuring AI benefits customers. So what do you think is the biggest thing getting in the way? So we've we've touched on lots of different areas and potential, you know, barriers for these things happening. But if I asked you for each of your wishes, what is the biggest of the barriers? What would you say? I'll come back to you first, Kate, because you just started.
00:32:53 · Kate Moody
[00:32:53] S2: Oh, you've just picked me because I was pulling visibly confused faces I think, yeah, gosh, it's a really tough question to answer. I suppose I try to think back to where have we seen some of the biggest initiatives and the biggest changes happening in the last few years in financial services, and certainly again, Benjamin Ross might have different opinions, but I think where we've seen some the biggest positive initiatives, it seems to have come from you, as Benjamin was alluding to, this kind of re synced up view between financial regulators but also government, other kind of different organisations, things like the rollout of open banking in The UK, new PIX in Brazil, other payment initiatives kind of at national scales, which have fundamentally challenged systemic issues in how those processes are working, where the fees are being charged, etcetera. So I do think maybe that is, you know, as Benjamin was alluding to, that's probably where one of the biggest challenges has been for other areas is that they haven't necessarily had these big issues that require really joined up responses. And yes, that's happened in a few areas but we haven't seen that happen across the whole spectrum of financial services yet. And it's very difficult for even, you know, for very well intentioned individuals within individual organizations that we see on here all the time in our work, it's quite difficult to make the case to be like the only bank or the only Fintech that is stepping forth and doing something which fundamentally challenges existing industry norms, product norms, custom norms. Sometimes these steps have to happen sort of more overall national, international level for them to be successful.
00:34:28 · Sarah Kocianski
[00:34:28] S4: That's fair. The... I think it would be fair to say that the whole industry, every different part of the industry and every different aspect of the ecosystem has a part to play. It's just not quite clear yet whose role is which, I suppose, would be the fair thing to say at this point. Ross, what about you? What do you think is the biggest barrier to banks being better incentivized to help customers build stronger financial futures?
00:34:50 · Ross Gallagher
[00:34:50] S5: I think it's really interesting, Sarah, because I think there's kind of like probably the answer for right now, and then that answer is probably fundamentally different in a couple of years time with the advent of AI. I think if you're looking at it right now, I think it's taking that longer term horizon in terms of how we think about the value we realize from relationships with our customers. You know, I think when you're constantly thinking about in your return and P and L and all of that sort of stuff, I think that fundamentally skews how we engage with customers. I think it fundamentally skews what we think about that relationship. And I think it fundamentally skews some of the decisions we make, etcetera. I think if you start to zoom out and start to think about value differently and you start to factor in things like engagement, start to factor in things like loyalty, and I think you start to think about, okay, well, fundamentally, how does that then transform the outcomes we can deliver for customers over a longer time horizon? I think you can start to build up a better picture holistically of their financial lives, it becomes a lot less fragmented. And then I think over time, actually, there's more value that you can realize by having that holistic picture. I think that's the answer for right now. What does that look like in two or five years time if people are just using, you know, sort of whatever their own chatbot agent is and they're not necessarily actually engaging with your digital channels, for example, directly and they're doing it all through the agent. I think that's a fundamentally different picture. Are apps even gonna be relevant, you know, in five years time in terms of any one financial institutions app like TBD? Maybe that's a different show, though.