The Game-Changing Impact of Agentic Finance on Banks | PRIMENEWSNOW

Back in 2019, I discussed, alongside McKinsey in August, how AI-driven agents are poised to transform banking by making complex financial decisions for customers, potentially reshaping the industry and impacting billions in revenue. The essence of this shift is simple: AI isn’t just for banks; it’s for customers.

The Unstoppable Rise of Agentic Finance

The implications for banking are profound. Former Standard Chartered Group Chief Data Officer, Shameek Kundu, highlighted in Citi GPS’ “AI in Finance: Bot, Bank & Beyond” report that the emergence of non-human customers is a significant trend. I wholeheartedly agree, and have been exploring its implications. Particularly, how financial institutions will adapt to these agent customers who are indifferent to traditional marketing tactics.

Consider when my AI-driven wallet uses open banking data to switch my savings account or refinance my car loan. How will my network of bot advisors choose the best provider? With numerous options and complex terms, I prefer to delegate these decisions. Bots, however, thrive on such tasks.

Bots will likely prioritize cost, prompting banks to compete aggressively on pricing to maintain market share. Bots can instantly compare prices, making affordability a key factor. Consequently, banks might focus on operational efficiency, cutting unnecessary expenses like TV ads, and modernizing IT infrastructure to compete on volume and price.

In this competitive landscape, prices will likely plummet, significantly affecting commercial banks’ business models. McKinsey’s 2025 Global Annual Banking Review indicates that $23 trillion of the $70 trillion consumer banking sector is in zero-interest accounts. Without adaptation, banks could face a 9% revenue loss, pushing returns below capital costs.

AI can help revamp banking infrastructure, potentially reducing operating costs by 15-20%, according to McKinsey. However, these savings will soon be eroded by competition, necessitating new competitive edges. But what might these be?

Embracing Digital Identity

Many industry experts, including myself, see digital identity as a key focus area. Commercial banks have a natural advantage here. As Kirsty Rutter, Fintech Investment Director at Lloyds Banking Group, noted, “our digital identity is our most valuable asset.” Numerous fintechs are tackling identity challenges, but a comprehensive infrastructure is still needed to establish a robust trust framework.

As agentic finance evolves, platforms are outpacing the trust frameworks necessary for real-world applications. McKinsey’s recent reports emphasize “credentialing and identity” as crucial control points in the agentic economy, as agents require secure, user-granted permissions for transactions. Organizations managing high-trust credentials have a clear advantage, with success factors including zero-trust architectures, dynamic consent protocols, and continuous audit trails.

Agentic Finance: The New Frontier

Financial institutions should seize these opportunities to remain relevant, as transactions increasingly bypass traditional systems, akin to financial dark energy composed of wallets and stablecoins. These transactions will require varying levels of trust, and the shift to agentic finance is driven by the need for privacy-by-design security, moving away from outdated security measures.

Humans are often the weakest link in security, but as I often say, while a fake Brad Pitt photo might fool a person, it won’t deceive a bot with a digital signature. AI is set to transform the industry, not just by optimizing call centers or credit decisions, but by empowering customers with AI, leading to a more efficient and customer-focused industry than the current hybrid model.