By Professor Andy Mullineux, Lloyds Banking Group Centre for Responsible Business

Professor Andy Mullineux attended the University of Delhi to deliver a lecture on technologies used in the financial sector in March 2019. The event was hosted by Professor Sanjay Sehgal, Head of the Department of Financial Studies in Delhi. This event advanced discussion of (academic) collaboration between Professor Mullineux and the UoB’s India Institute delegation, their counterparts in India as well as the DFS, University of Delhi.

As long ago as 1994, Bill gates of Microsoft declared banks to be dinosaurs awaiting extinction as a result of digitalisation of banking.


There is an increasing prominence of artificial Intelligence (AI) in modern banking practices; from predictive algorithms and machine learning, to ‘Big Data’ using ‘digital footprints’ in social media and financial transactions. These technologies are increasingly used in banks, small ‘FinTech’ and ‘BigTech’ companies (eg Google, Amazon, Apple etc) all of which are now forming the heart of modern credit scoring.

Due to this upswing in the use of technologies in the financial sector, regulation is required to assure the responsible delivery of banking services. Banks are subject to regulations for obvious reasons, but FinTech and BigTech and other ‘shadow banking’ providers currently lie outside the regulatory net.

Historically, big banks have dominated payments systems, but BigTech companies are progressively challenging that dominance. With widespread adoption of ‘algorithms’ and the digitalisation of banking, the time of reckoning has now come: big banks seem likely to take over promising FinTechs to help build their digital platforms, leaving BigTech to build upon their already established payments systems (ApplePay and GooglePay).

This means there is a threat to the big banks from BigTech, which are consuming FinTech firms and their ideas. This raises a number of data issues, not least of which is ownership of personal information.

The concept of ‘Open Banking’ was imposed in the UK by the Competition and Markets Authority (CMA) in 2018. Under this system, banks are required to share information on their customers with other potential providers, provided the customer gives permission. There is a risk that customers’ fears regarding digital security may impede take-up, but the UK systems will be built around common Application Programming Interfaces (APIs) to provide secure access to digital platforms and interoperability between providers.

AI is likely to be used to target customised service provision and could also help provide financial advice to facilitate better decision making (under the watchful eye of the UK regulator, Financial Conduct Authority (FCA)). It is thus crucial to create a ‘level playing field’ between banks and shadow banks, including BigTech companies. This will require setting conformable regulations for all  providers of banking and wider financial services and, in line with the Furman Review[CC(BS1]  (12/03/19) for the UK government, requiring ‘Open Data’; under which BigTech firms would, like the Big Banks, be forced to share their data (with the customer’s permission) with other potential service providers.