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Paul Pester: How the Marriage of Generative AI and Open Banking Will Make Banking Work for Consumers

Imagine you had a dedicated financial adviser whose job is to constantly look for patterns in how you saved and spent, align them with your goals, and offer tailored advice to optimise your investments. If you had millions of pounds in the bank, you could easily hire an adviser to orchestrate your financial life, building an investment portfolio to grow your wealth over time. Of course, most of us don’t have this luxury, but generative artificial intelligence has the potential to bridge the gap, bringing sophisticated financial strategies to the masses.

“Generative AI could provide intelligent digital bank managers that help people get on top of their banking,” says Paul Pester, the chairman of digital-first challenger bank Tandem. “When we have an AI engine that can do that for us at essentially zero cost, it opens up opportunities for consumers.”

Generative AI and Open Banking

Generative AI, a technology the public is now more widely familiar with thanks to services like ChatGPT, can generate new content after learning from a set of data. Unlike traditional AI systems, which are programmed to respond in predetermined ways, generative AI can create novel responses, solutions, or content based on identifying patterns in the data it’s trained on.

Paul Pester believes this technology could be combined with open banking, a system that allows the secure sharing of financial information electronically, to change the way we engage with our economic data.

Open banking enables consumer-approved information sharing between banks and third-party developers. It opens up traditionally siloed financial data, allowing for a more interconnected ecosystem where consumers have more control over their financial data and how it’s used.

​​Open banking regulations in the U.K. have created opportunities for a new generation of fintech startups to build innovative products and services, such as apps for peer-to-peer payments and retail investing. Integrating generative AI’s ability to understand individual user preferences and behaviours could help consumers make more informed decisions using these fintech products. The marriage of open banking with generative AI could provide a customised and intelligent digital finance assistant that learns and evolves with the consumer’s actions and preferences thanks to a better understanding of their financial record.

The goal would not be to offer generic tips, but rather to have personalised AI learn about an individual’s financial nuances and goals and provide tailored advice for decisions large and small. In theory, this would shift the paradigm from one where personal financial advisory services are a premium mostly available to wealthier consumers to one where they’re part of the basic package for any individuals who want to make the most of their money.

“I think that with the combination of generative AI and open banking, the availability of all of that data, there’s an enormous opportunity to build a sort of personal bank manager in your pocket who has a personality, who knows you, who knows the way you engage with money, the way you engage with your life, and helps manage your financial life for you,” says Pester.

 “It’s basically the sort of thing you would have if you were a multimillionaire. You’d have a personal banking manager running around doing all this for you. I think a combination of open banking and generative AI enables you to do that, but there’s no one really doing it yet. There’s some very boring budgeting tools out there, but there’s nothing that truly engages on a personal level with individuals.”

In recognising this, Pester is continuing to steer Tandem toward innovation. As part of the first generation of online “challenger banks” launched in the early 2010s, the company is focused on offering intelligent, environmentally friendly digital banking services to deliver its mission of helping mainstream consumers reduce their carbon footprint — and save money along the way.

The Future of Finance?

Of course, to bring this AI-enabled banking vision to life, banks and tech companies will need to invest significantly in AI development, ensuring that these systems are not only intelligent and adaptive but also secure and trustworthy. There are challenges ahead, from protecting consumer data privacy to ensuring the AI’s advice is ethical and unbiased. Nevertheless, the potential for positive impact is substantial.

The everyday consumer could be standing at the cusp of a future where they are more in control of their financial destiny than ever before, thanks to the symbiosis of generative AI and open banking. What might have sounded like a futurist’s dream a few years ago is fast becoming an attainable reality, with AI models improving exponentially and new applications being developed constantly.

Ideally, the democratisation of personal finance through AI would lead to a more financially astute populace, a fairer banking system, and a new standard for personalised financial services. The generative AI revolution in finance is just beginning, and the hope is that it can empower a new generation of consumers in ways that were previously the exclusive domain of the financially elite.

“Generation Zs and millennials are much more interested in finance, but they don’t have a lot of money to invest,” says Pester.

“Technology is so important for them because they can’t afford to have an individual adviser sitting down with them, talking them through what’s right. It’s all technology-based, but technology is democratising access to investments and financial education, and I think that’s a really positive and interesting trend we’re seeing.”