AI ripens to shake up private banking, says Israeli entrepreneur

AI tools are ripe to disrupt the private banking sector, Amnon Shashua said, as his new digital bank One Zero prepares to expand its operations outside of Israel.

Shashua last year launched One Zero whose investors include Swiss private bank Julius Baer, ​​US private equity group Cerberus and China’s Tencent as the first new Israeli bank to be formed in more than 40 years, and is planning to apply for a license in Italy by the end of the year.

The feat is one of several AI-enhancing projects spawned by the 63-year-old computer scientist, who co-founded and still leads self-driving group Mobileye, and comes as the hit of a new wave of smart products. generative artificial intelligence, such as OpenAI’s ChatGPT and Google’s Bard, have sparked a frenzy of investor interest in the sector.

Shashua said implementing AI technologies, such as large language models, in private banking would radically increase the efficiency of relationship managers and make it possible to offer services previously accessible only to the very wealthy to a much wider selection. of customers.

This is really a break in the banking world, he said in an interview with the Financial Times. And you can only do that in a neobank because you don’t have the legacy core systems.

Relationship managers at Swiss private banks, which dominate the global wealth management industry, typically handle the affairs of around 100-200 wealthy clients each.

The Israeli firm of One Zeros, which has acquired 60,000 client accounts since its launch last summer, has 1,000 clients per relationship manager and expects to reach 2,000 by the end of the year.

But Shashua said the firm’s long-term goal was a 1:10,000 ratio, allowing One Zero to provide services previously only accessible to very wealthy clients, such as bespoke financial advice, to a wider market.

The plan is to be the first pure-play pan-European digital private bank for the mass wealthy, he said, referring to clients that One Zero characterizes as having available assets of between $50,000 and $500,000.

One Zero, which raised $250 million and was valued at $385 million in its latest funding round in February, uses AI to analyze client portfolios and provide bankers dealing with them with advice to share.

But Shashua said he expects the biggest gains in scalability to come from implementing Generative AI, the powerful technology behind services like ChatGPT to enable the One Zeros chatbot to respond to sophisticated customer inquiries and free up bankers’ time. for other activities.

If people aren’t getting answers, they feel like they’re not being served, so that needs to be managed through human bankers or automation, he said. The rise of language models…is ripe for creating this automation.

Many banks are already using chatbots to deal with customers, but the range of questions they can answer is limited by the fact that they generally work by giving customers a choice from a pre-determined set of questions, rather than answering free text.

Nizan Geslevich Packin, a commercial law professor at the City University of New York, said that generative AI has the potential to improve how efficiently banks can deliver certain services.

But he added that applying it to personal financial data has posed a number of challenges related to technology bias and the tendency to hallucinate when AI confidently provides inaccurate answers, as well as issues related to customers providing informed consent for the use of their information. We’re still in the early days of trying to figure out what that means, she said.

Gal Bar Dea, chief executive of One Zeros, said tackling hallucinations and data privacy issues were the two main challenges the bank faced in developing its generative AI chatbot, as well as making sure it was unresponsive to questions such as requests for suggestions on stocks that weren’t allowed. But he said it was already being tested internally and the bank plans to roll it out for customers in the coming months.

After studying mathematics and computer science at Tel Aviv University, Shashua founded companies applying artificial intelligence in areas ranging from robotics to natural language learning. His biggest success, however, was Mobileye, which Intel bought in 2017 in the largest deal in Israel’s history, before going public last year.

Asked if he would consider selling One Zero, Shashua said it’s too early to talk about mergers and acquisitions. But he wasn’t committed to the future. My interest is technology, she said. Once the technology is gone, I’m not a banker.

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