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AI ripe to shake up private banking, says Israeli entrepreneur


Artificial intelligence 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, ​​U.S. private equity group Cerberus and China’s Tencent — as the first new Israeli bank to be established in more than 40 years, and plans to apply for a license in Italy by the end of the year.

The venture is one of a number of AI-deploying projects spawned by the 63-year-old computer scientist, who co-founded and continues to lead the autonomous driving group Mobileye, and comes as the success of a new wave of generative AI products, such as OpenAI’s ChatGPT and Google’s Bard, have sparked a frenzy of investor interest in the sector.

Shashua said deploying 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 only accessible to the very wealthy to a much wider selection of clients .

“This is a real disruption in the banking world,” he said in an interview with the Financial Times. “And you can only do it in a neobank because you don’t have the legacy core systems.”

Relationship managers at the Swiss private banks, which dominate the global asset management industry, typically each manage the affairs of about 100 to 200 high net worth clients.

One Zero’s Israeli company — which has acquired 60,000 customer accounts since launching last summer — has 1,000 customers per relationship manager and plans to reach 2,000 by the end of the year.

But Shashua said the company’s long-term goal was a 1:10,000 ratio that would allow One Zero to offer services previously only accessible to high net worth clients, such as tailored financial advice, to a broader market.

“The plan is to become the first pure play pan-European digital private bank for the massively wealthy,” he said, referring to clients that One Zero says have disposable assets between $50,000 and $500,000.

One Zero — which raised $250 million and was valued at $385 million in its last round of funding in February — uses AI to analyze clients’ portfolios and provide advice to share with the bankers dealing with them.

But Shashua said he expected the biggest scalability gains would come from deploying generative AI — the powerful technology behind services like ChatGPT — to enable One Zero’s chatbot to answer sophisticated customer questions and help bankers free up time for other tasks.

“If people don’t get answers, they feel like they’re not being served, so you have to handle this through human bankers or automation,” he said. “The Emergence of Language Models . . . is ripe to create this automation.”

Many banks already use chatbots to interact with customers, but the range of questions they can answer is limited by the fact that they generally function by offering customers the chance to choose from a predetermined set of questions, rather than having to respond to free text.

Nizan Geslevich Packin, a business law professor at the City University of New York, said generative AI has the potential to improve the efficiency with which banks can deliver certain services.

But she added that its application to personal financial data presented a series of challenges related to the technology’s biases and tendency to “hallucinate” — when AI confidently gives inaccurate answers — as well as issues surrounding customers giving informed consent. for the use of their information. “We’re still in the early stages of trying to understand what this means,” she said.

Gal Bar Dea, CEO of One Zero, said that dealing with hallucinations and data privacy issues were the two main challenges the bank faced when developing its generative AI chatbot, and making sure it didn’t answer questions — such as requests about stock tips – that it wasn’t allowed. But he said it was already being tested internally and the bank planned to roll it out to customers “in the coming months”.

Since studying mathematics and computer science at Tel Aviv University, Shashua has founded companies that apply AI in areas from robotics to natural language learning. Its biggest success, however, was Mobileye, which Intel bought in 2017 in the largest deal in Israeli history before going public last year.

When asked if he would consider selling One Zero, Shashua said it was “too early to talk about M&A”. But he was noncommittal about the future. “My interest is in technology,” he said. “Once the technology is ready, I’m not a banker.”

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