The era of incremental change in banking is reaching an end. Instead of reacting to digitization, banks must adopt and instead of being restrained by regulations, they must adapt.
As tech companies, fintechs and traditional banks increasingly compete for the same customers, which strategies are proving most resilient and what will it mean for the industry?
This session was developed in collaboration with CNBC.
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At Davos, banking leaders and regulators argued that the next phase of digital transformation is less about digitizing legacy processes and more about “moving up the value chain,” as RBC’s David McKay put it—owning discovery journeys like homebuying and small-business formation before a payment occurs. PayPal’s Suzan Kereere framed the competitive battleground as trust: “Trust is the network effect that actually stimulates commerce,” built through responsible handling of money, data, identity, and transparent lending terms. CEOs described AI’s near-term impact as productivity-led, particularly in back office and compliance, where it can reduce “false positives,” while longer-term gains may shift to new products and revenue models. Regulators emphasized pace and operational resilience: Qatar Central Bank warned that if supervision lags innovation, “structural gap will emerge,” pushing risks outside regulatory parameters. Central banks also see themselves as market enablers, investing in instant-payment infrastructure and sandboxes. A recurring fault line was regulatory asymmetry: banks want “the same level playing field,” while regulators argued fintechs need proportional requirements to grow. Cyber and fraud dominated risk discussions, especially third-party vulnerabilities and platform-enabled scams. On whether AI makes banking safer, the panel hesitated: it will boost efficiency, but safety depends on governance, resilience, and ecosystem coordination.
Good morning, everybody, and welcome. I was given my cue and thank you for being here. We're kicking off we're kicking off Davos really with this with this panel on this Tuesday morning. And thrilled to be having a conversation about banking AI digitalization technology kind of ties a lot of the key themes overall of the World Economic Forum together. And we are so honored to be joined by an esteemed panel here. And it's and it's a mix of bankers and fintech players and regulators. So I'd please welcome Andrea Estévez from Brazil. He's the chairman and partner of Banco BTG Pactual. We have Susan Carrera. She is the president of PayPal. We have David Mackay, the CEO of RBC, the Royal Bank of Canada. Bettina Orlopp is the CEO of Commerzbank. And joining us here from the regulatory side from Qatar, we have His Excellency Sheikh Bandar Al-Thani. So thank you all for joining us and really want to create a dynamic conversation here about how we make the system safer and more innovative and more forward thinking when it comes to banking and technology. So, David, maybe I'll maybe I'll start with you because, you know, RBC gets a lot of credit and, sort of awards almost in my research, I saw for how fast you've been digitalizing the bank. What does that mean? What have you done?
Well, thank you, Sarah. Great to be here. Great to kick off Davos early morning.
Sorry to cut you off by the way. We're going to take questions. So think of think of questions in the final minutes. And please please join us and make it interactive. Sorry to cut you off. Go for it.
We think of digitizing our business. We think about it in a couple of dimensions. One, no. We compete on trust. We compete on scale. We compete on service and value. And when we think about value, a big part of our digitization has been moving up the value chain. So what do you think about discovery? Searching for a home, starting a business, digitizing that approach. If banks just remain the last mile of payments, at the end of the day, I think that's where we we risk disruption. So part of our digitization is to digitize the physical services that we've been delivering for hundreds of years, but also to expand our value chain and our competition up into discovery and the value chain. That way, we can curate a journey for the customer through a mortgage process and searching for a home, finding a home, financing a home, living in a home and shelter. Same thing. Starting a business, same thing. In the payment side is we have an e-commerce capability as well as we help clients search for goods and pay for goods. So part of part of our digitization is expanding our value chain, not just digitizing who we are today. I think we've been very successful in doing that. We acquire customers through those expanded value chains, but it's just as important that our system and the physical world and into the digital world has a lot of friction, and we have to eliminate that friction by rethinking the processes. And I think digitization, starts to embed AI. At first it was reinforcement learning and machine learning. And now when you get to generative AI capabilities, it allows us to more exponentially rethink those value chains and lever that. So we're in this, I think third wave of digitization using generative AI and AI to do that. And that's a whole conversation. So I think it's it's both of those it's rethinking the world, but also rethinking our basic service levels at the same time.
Susan, are these your competitors, these banks at PayPal?
Yeah. Or expanded. We call them frenemies at the end of the day.
Like who's a tougher competitor, a PayPal or a commerce bank for an RBC.
They both offer different capabilities. Right. So PayPal absolutely is a partner and a competitor as far as end to end payments. Same thing as Apple and Apple Pay. But we partner at the same time as we think about how to serve our customers. So you know, the important part, one of the most competitive areas that we need access to is the chip on a phone. Like one of the barriers that we have is offering a true wall in the physical and digital world, and therefore that phone capability is something that's a barrier, particularly in Canada, where we don't have access to the NFC chip on the phone and therefore we can't offer a competitive wall. And that that type of competition is poses a real challenge.
Yeah, I think they call it frenemies. Susan. So how do you how do you look at the the opportunity for PayPal and how does it how does it relate to if these guys are digitizing and moving into Agentic AI? Is that a threat to PayPal?
I mean, so first, thanks for having us or having all of us here. I actually want to start where David started, which is the reality is for any one of us to win with consumers, you have to win on trust. Trust is the not just the new, but trust has always been the network effect that actually stimulates commerce. So we're all chasing the same thing. And trust is a formula. It's the ability to trust that when people have your money they'll do the right thing. It's ability to trust. When they have your data and identity, they'll do the right thing. It's the ability to trust that when they lend you that, the terms that they lend money to you on are transparent and clear. So those are the ingredients that fintechs and banks are actually working towards. I think of all of these folks as, yes, partners and competitors. And I think as you look at PayPal, over many years, we've been at the fintech game now for two and a half decades. We sit across several intersections. We're not just sitting across banks and regulators, merchants and consumers, but we're doing it in 200 plus markets. So at the core, the ingredients that win trust is that you're building products that are fundamentally well regulated, well governed, very clear, cross-border and interoperable. The way we cooperate with banks is we think consumers now have made choices. They're looking to optimize their financial lives. They're choosing some banks for their mortgages. They're choosing different actors for deposits. They're going after wealth management in different ways. Some of those things are generational. Some of those things are just point in time. Where do I get the most value? And because the, the exit costs are much lower, consumers are voting with their feet. They will leave you in the instant that they no longer believe that you provide value. So we've made the choice that we're going to work in collaboration, not just because banks were the original arbiters of how trust was built at scale, but because the reality is you need banks to incorporate their products in your wallet. You need banks to help you better underwrite risk. You need banks to actually help compete for that consumer share. I think competition is a healthy thing, but I also think cooperation allows us all to build on this trust currency, because when trust is eroded, it's actually very bad for.
Yeah, I mean, trust is I think will be a running theme. But Bettina, you know, with the with the rise of AI in all business, but in financial services and banking, how do you view the competitive landscape? Has it changed where you have banks and fintech and tech companies increasingly competing for the same consumers and their services?
I think that that happened already before. Now the emergence of AI. So competition is anyhow high. It's it's an attractive business, as we all know. And for us, AI is actually only one thing. And that is an opportunity because it makes us faster, more efficient. We can create value for our clients. And, and specifically in a situation as you are, we are 155 year old bank with lots of legacy systems and stuff like that. And it really helps us to to speed up and to accelerate our strategy. And that's what we do. We, however, also face the challenge that you need to make sure that your clients are with you. And we see it in our own group. We have a subsidiary in Poland, Mbank, where you have 100% private clients through digital, and they're digital natives. And therefore you can have a complete different strategy with mobile first and everything you can use there. But in Germany, we still have a number of clients, believe it or not, would love to go to the branch network and who do not have, online credentials. So you really also and actually AI is supporting us even with that. When I think about the call center we desperately need, because we have so many people who still want to have, a real agent, to, to, to serve them. Then Agent Assist helps us to make them much faster. So for us, it's it's really a benefit. And for us, 2026 is clearly also the mission to digitize, our, our clients even more, to, to really take the full benefit of AI.
Our branch is dead. Andre. She said that they still people like branches. But you don't like branches.
Well, we don't have branches. But, the history of our digital journey is a little bit different. If you go back 20 years or 15 years ago, corporate investment banks used to have a lower multiple than retail banks because there was a perception that competition, was much easier in a wholesale franchise than in a retail franchise. Exactly. Given the thousand, network of network of thousand branches, in different jurisdictions. Now, 15 years later, maybe it is the opposite. Right? You have now so, so many regulation, capital requirements, reputation requirements, governance requirements. That is not easy to establish. A big wholesale or corporate investment bank franchise. And on the other hand, retail banking became a much more competitive play because you can compete with a big tech, with a retailer, with a wholesale player that created a digital franchise. So it's a huge transformation to the benefit of the society, honestly, because, margins reduced some, simple products that were very expensive now became very cheap, very accessible, much more, banking, inside the society, penetration of banking increased in other countries. So it's it's a very positive transformation that technology is bringing. The alert about this digital transformation is probably related to regulation, because in our industry, there is a very important line about regulated and unregulated. And we need to be sure that, our people that provide the same service with the same risk, with the same risk taking, should have the same regulation.
Is that not the case?
I don't think so. A lot of arbitrage in all markets happening, from fintechs to traditional banks to insurance companies to banks to capital markets and banks. So it's a challenge because every time that you have big transformation, you need to face challenges like that. I consider this as a natural challenge, but something that we need to to pay attention and everything that we created in terms of regulation after the global financial crisis, I think was mostly positive and made bank system much more safer, predictable, better regulated. But it will not be useful if, a parallel system is coming without the same level of,
You mean for fintech, insurance, private credit. I mean, we have a regulator.
Actors? Yes.
Yeah. I do want to bring in our regulator on the stage. We have the head of Qatar's central bank, Your Excellency. I mean, you guys have been very forward thinking about technology in the financial system. How do you how do you how do you address gaps like this between fintechs and other banks? And how do you make sure you're regulating to promote innovation, but also to keep the system safe?
Yeah.
Thank you for having me. First of all, I would like to emphasize that, central bank, should continue to be, guardian of stability, because stability is very important for any, any market. And this is the job of the regulator to keep the financial sector safe. And resilience. However, we must also not overlook the fact that with the recent development in technology and the technologies are transforming, fundamentally transforming the financial sector. And if the regulator, regulator don't keep the fail to keep the pace with these changes, then, structural gap will emerge in, in the, in the system. And that structural gap could, could lead to emerging new risks that could migrate from the, regulatory, regulatory, parameters. So, as a central bank, I'm really a support supporter of adopting a forward looking approach, a forward approach for regulating, you know, financial, financial sector. You mentioned now that how can regulator make the market safe and enable innovation, etc.? Central bank's playing also not just the role of regulation and keeping the market safe. Central banks those days playing the role of enabler and enabler is to, invest in market infrastructure where that can make the market more efficient. Let me give you an example here. Recent reports showed that more than 100 countries more more than 100 central banks, don't, have fast payment system. And fast payment system is very important for any, for any economy to make the economy, efficient. For example, two years ago in Qatar Central Bank, we have announced of our new payment system and those new payment system, one of the product as a result of this new payment system was an instant payment where the sender and receiver can receive, the, the funds within, second. And you don't need to, you know, input this IPN number. You can choose your alias, whether your number, whether, your nickname email whatsoever which easy for you. So that will help to, you know, that will help to make the capital flow in the market much faster, that will make the market more efficient, that will also, help to reach the goal of cashless base economy. And this is a type of digital, digital product. So, this, this now central banks playing those roles, which is enabler, enabler roles. And one of the roles that central banks are playing those days are, you know, to to help the banking sector and fintech companies to be able to, test their products in very safe environment, such as sandbox, where they can test their product. There also new digital products in very safe environment. So, central banks, they have big role to keep the market safe.
What are some of the key risks that you think about as a regulator when you look at our AI future of banks? Cyber is it.
It's, it's one of them is cyber, as you mentioned. That and the other thing, that regulator, if they don't, issue a regulation that govern the AI, also, there will be a risk, we have issued, last year, guidelines to, adopting AI in the financial sector, those guidelines that will govern how the banks in our market will adopt AI and to make sure to protect customers, customers data, customers information, and to protect the bank from any emerging risks, such as cyber.
Does to other countries have that. Are you the only one to do that? I don't think we have that in the US.
Do we have? I'm not.
Sure, but.
We.
Do.
Have it.
You're you.
You're up for sure has it?
We have the AI act.
Yeah. I mean, I feel like you guys were triggered with the whole regulation gap. David, whether there's fairness across the system when it comes to these emerging technologies.
Yes, sir. I'd just like to jump in on the question of quickly on the future of the branch, too, because this is the mobile phone becomes, to your point, the preeminent channel for a client, and we evolve our agentic AI around the phone. We are reinventing the branch, and technology allows us to have an asynchronous channel within a branch now. So we've just deployed this throughout Canada where the branch is now three channels. You can sit there and serve a customer physically that comes in, but if there's a gap in your service levels, you're you're in right in your station, you're into a chat line and you're taking customers off the chat queue and you can have a headset, you're going to the call center. So one agent has three three channel capability in a branch. And therefore the productivity of the branch has been can reignited that the economic returns have just improved. We are diminishing the number of branches, but the productivity out of every branch has been enhanced significantly and therefore is three channels and one. So we are building a mobile, but we're also that physicality of that network is still really important to customers. When they give you their money and put a deposit with you, they need to know there's a physicality of that network. So I think that is really critical. And to your point around, you know, the fairness and openness as we move to open banking, we share more information about the customer with various fintechs. That level playing field is absolutely critical. And therefore we're advocating through the Competition Bureau, through other venues, through the government to say we need access to the chip if we're going to give information that enables fintech to understand our customer and offer competitive services. So I think that's certainly fair. And as far as the risks go now, we're very we're very concerned about hallucination of the model. Right. You've got to continue to test. And that's where our regulators in Canada, our bank regulators are worried about. Will the model make a mistake. Will it have reputational risk. Will it have credit risk to that mistake. Can it take your system down. And these models are still being tested rigorously, but they still hallucinate. They still make mistakes. And therefore if you're deploying it into a customer situation which is early days yet mostly agentic models that we're building are for back office processes right now. But the error rates and the veracity of those models is, I think, the primary concern of our regulator.
So so do you want to see that done through regulation of tech of the AI models or through banking regulation?
I think we have to regulate our own models and demonstrate through testing and through self-regulation. Self-regulation. Well, that will be audited by our external auditors, obviously, and then by our regulator. We'll do audit exams as well to demonstrate to us that you have veracity of the model. You've tested it, you have a rigorous testing program. You'll have to demonstrate all of that as you deploy these models into a customer environment.
Yeah. Oh go ahead.
I want to come into this one, please.
Sure.
Yes, please.
Actually you mentioned very important thing which is operational resilience. So I do believe that operational resilience should be also treated as core prudential risk and should it should not be, treated less important than capital and liquidity. Those two days with, with the technologies development and most banks applying and adopting new technologies, it's very important that all the banks, map their, end to end service and to be able to recover from any disruption that happened in the market, by, you know, by cyber attack or any other disruption, they should be able to recover in, in minutes, not in hours. So to keep, you know, to protect the customers and to keep, the bank system safe as well. So they should have, they should have a plan in place, recovery plan in place where they can recover very fast.
Suzanne. Sorry, I didn't mean to cut you off.
So there are so many good points here, that I have to.
Yeah. We're, like drafting a new regulatory framework.
Draft away. There are now, what, 3.5 billion people or more who use digital wallets as their the way they do banking every day. So arguably, you have to ask the question, if 3.5 billion people are going to do something on a repeated basis with a great deal of trust, there must be something that's working. And it's not just the fact that regulation isn't fair, it's the fact that many of these wallets are solving problems that have remained over many years. There's still too much friction in trade. There's too much friction in lending. Small businesses don't have the same access to capital. Consumers arguably have not had the same utility to use their wallets outside of their home country, until many networks like ours enabled a level of interoperability, whether it's with banks or other local payment options. So something is working. Should there be a level playing field? Absolutely. Is regulation the only way to get to a level playing field? Maybe not, because the currency we're trying to compete for is trust. So that's the first point. Second point is if you look at the role of Argentic, Argentic is changing everything. If in my business what Argentic is doing is it's changing the destination for how consumers make choices for discovery and purchase. It used to be that the way you paid was the end point. No. Not anymore. The fact is, now you can chat your way through a transaction, and over time you're going to see much more chatting to buy things. That's going to change commerce everywhere. And again, if you look at where commerce is happening, over 50% of it is happening in digital wallets. So what should we do to continue to build on commerce, to build our ecosystems? Because without commerce you don't have small businesses, without small businesses, you just don't have growth. In many markets. We need to collaborate. We'll never agree on the degree of regulation. I argue that regulation is different. It's different across banks, banks of different charters, different sizes have different regulatory commitments. Digital banks have different requirements. It depends on the use cases. It depends on the need. It depends on where you do business. Should regulation look the same across countries for the same use cases? Maybe. Should central banks communicate and work together to build one ecosystem where everyone can compete the same way? Yes, it takes a ton of friction out of innovation. It makes it easier for companies and banks and fintechs to do business around the world. There's still a ton of friction. I think regulators, banks, fintechs should all sit at the table and figure out how to take the issues out of how consumers and small businesses operate. For me, that's the end game. Like, I'd rather not spend my time competing with these guys, but I'm going to compete as long as there are gaps in the market that our companies can take out. Yeah, that's what free trade looks like.
Do you think do you think they should have more regulation on fintech? Do you want to take the other side?
I would just say that we as banks who are heavily regulated, we want to have the same level playing field full stop. Don't we want to have.
Want to the same? But you do not.
And we don't have and that's for sure. And we have seen it also with fintechs. If I take Germany, they started their businesses there, flew a little bit under under rather they grew a lot. And finally, they got hit by the regulation and now they are very similar in this situation as we are. Do I want that? Not necessarily, but I want that we are all treated with the same, because I don't like if clients come to me and say, oh, you know, they are doing this onboarding process so much easier than do, why are you so complicated? Well, full stop, because we have the regulation we have on sites all the time. People are looking at us and then there's someone else who's doing the same product, but is is is not controlled the same. So we want to have same level playing field. I think on the AI side, I just want to make sure that we, we really differentiate and that is super important now with, with and that is also the debate we have currently in Europe is that it's not all the same. There are some very high risk processes like loan processes, loan decisions and stuff like that. We need to make sure that you're not having models, that you're not doing, that you're not losing customer data and all this stuff. But you need to make sure that then there are other processes which makes us much more faster, that you are not treating everything alike. Because that is a big danger, that then we just have a debate about loan process, that everything around loan process is now high risk and needs to be fully controlled. That's stupid because there are a number of things in the process which can be just, make much easier with AI without taking any risk. So this differentiation is something we really ask in regulation. And and I mean, it's also the debate which we have in Europe, clearly that we also do not have a level playing field when it comes to our US banks. At least.
European banks versus us. I mean, deregulation is all the.
Is the theme for the US. It's probably also the same. I don't know how it is in Canada, but it's the same also for the UK. It is not yet. In Europe. It's more about simplification, which is also great. But we also need to make sure and that is what we, what we ask for is really creating. Yeah. Similar conditions. For the.
How is that in Brazil.
Without risking stability? Let's be very clear. Right. We have achieved a lot to make the system stable. Nobody of us wants to risk it, but we want to make it efficient. And specifically we want to create value for the clients. And they they they really need to see that they get the right things for their money.
How is that in Brazil and South America, if the US is deregulating the financial sector in Europe is is not. Where does Brazil sit?
I think in Brazil is more aggressive than us. The digital infrastructure progressed very faster. It's a Disneyland for fintechs. And, because you have a very good digital infrastructure on the banking system, not because we have the best tech, in the world, but because our past of as a society of high inflation made Brazil very efficient in payment systems. So you can settle a transaction in seconds, using the peaks, which is a universally available payment system. So in this great infrastructure for a lot of new products, new firms, new business. And as we said before, with the benefit of the consumer and the society, but when you have this prolific environment, you need to also some order in, to, to make these, safe and sound and clear and protect the society against frauds, against cyber attacks. And that's where we are. So a lot of fintechs, a lot of entrepreneurial spirit in, in banking, which is quite good. Brazil was always a very efficient banking market. And now it's even more with these, number of fintechs, new products, new business models. And it's a challenge always to keep the regulation, making the system safe. It is safe, but it's always a challenge to discover.
Are you losing share?
No, in our case, is originally BTG was a corporate investment bank in about ten years ago, we launched the digital platform. So we are on the fintech side on this, on this thing and just making a comment, both on investments or, SMEs, or consumer. We are doing our full fledged banking offer using mostly digital for the retail part. And it's important to say that this idea of branch, no branch, we don't have branches because we were born without branches. But, I think what is important is the human touch, and the human touch is still there. Even if you have the most sophisticated robo advisor for wealth management, for example, in high income retail, all sorts of tests that you do, you notice that if you have some human touch, it's more effective the sale, the service provider, the security of the transaction. So, for us on the business side is to find this balance of human touch. Don't need to be necessarily a physical house like a branch, certainly much less branch, but absolutely necessary. Still, as a society, the human touch in in banking, even if it's done mostly digitally.
Just fewer human touches, maybe.
Yeah, fewer and more efficient.
Wouldn't it be nice if there could be some more? More? I mean, it sounds like everyone would agree more centralized rules and regulation. I mean, that was supposed to be Basel, right? But but how big do you see the regulatory gaps in the financial services sector and how do you take advantage of that, or how do you push for some sort of cohesion?
Yeah.
First of all, that, maybe we hear voices that saying, central banks taking a very tightening regulation approach. But let's go back to the financial crisis, 2007 and 2008, after the financial crisis, central bank maybe took more tightening approach to protect the financial sector and to protect also the depositor. So, now if we compare, banks regulation to fintech, fintech, it's a new industry that we need to support. And banks, conventional banks, they already well established, they have larger capital. They are they, they exist since long time ago. However, the fintech, they need a little more support. You cannot, apply regulation on fintechs. Same and same, you know, scale as to, banking. Even in the banking system, we have large banks, we have, mid bank and we have small banks. Same thing applied to the banks. The capital requirement for larger banks is not the same as for small banks. So, I think there is a job for regulators that to, support fintech industry and to, make the system, the fintech and the banks to cooperate instead of, you know, just compete their right to compete, but they need help also as a regulator. For example, in my country, when we, recognize that the fintech could not compete with the banks, we, we sit with the fintech, we brought to the table the fintech and, the banks, we saw the area where they can cooperate. How can the banks also help the fintech to grow? And also we look to the barriers that, make the fintech, difficult to grow. One of them, for example, is, is integrating them to the payment system. So what we have done, instead of going in direct to the payment system through the banks, we have integrated, fintech company to, to our to the central bank payment system. After we made all the diligence, all the regulation requirements, we made sure that they have it in place to, to protect also the system and to keep the system safe and resilient as well.
How much how much are you guys spending on on tech right now. Do you break it up.
Yeah. Yes we do. Yeah I mean.
Do you share it publicly.
Yeah. We say that. I mean, we spend in in change the Bank and we are a small bank 500 million each year.
500 million on a on like moving into an AI future.
Well, it's moving into everything. It's modernization. It's AI, it's digitization, normal digitization, all the stuff. It's also meeting regulatory requirements, things like that. And it's in relation to our cost base. It's, it's it's a good number.
It's a good number. David. What about you.
On all tech including infrastructure, 6 billion.
6 billion a year.
One of the largest banks in the world. But six, six.
How do you measure the return on that investment?
Great question. You know, we certainly.
Changed the bank, right.
That was the only change the bank. Sorry, change the bank would be a third of that.
Would change. Yeah.
We have one. The bank change. The bank change the bank would be one. The bank would be also much higher in our case. But change the bank is really where you really modernize.
Your application development budget.
Which is oh I don't know. I just want like a total.
Like total.
I want a headline.
Of that. Two is to change the bank $2 billion a year. Yeah.
So how do you how.
Do you measure.
How do you measure where how that comes out?
Every program has a business case to it. And we look at the benefits what cost benefits, revenue benefits. It has to go through a committee that I chair, and we won't spend the money on app dev unless we have an economic return over a three year horizon. So it's, it's a very disciplined process. And sometimes you hit your numbers, sometimes you don't at the end of the day, but you always go into it thinking that this is the return I'm going to get on this technology investment.
I mean, I guess one of the questions is, Andre, how how AI transforms banks. Is it is it fewer people? Is it through productivity? Is it through growth? And how different do banks look in five years from now because of it?
I think we are in the moment that AI is changing the bottom lines of the banks. I think productivity is the key topic for the next, still 2 or 3 years, but I think we will arrive in a moment of the top line change using technology, which will be more exciting.
This year.
No, I don't think this year I still think 2 or 3 years more productivity driven. And when you look, if you ask me, where you had the most productivity gains from AI, sometimes you have a surprising answer. For example, in our case, compliance was a huge winner of AI. You are much more effective. You you reduce the number of false positives, you increase the numbers of positive positives. So it's a it's an amazing transformation for compliance, which was unexpected two years ago. So it's a it's a big change. But of course productivity across the board. But I think soon there will be new products AI based and new ways of, of doing financial business using AI, but it's still being created, I think at this moment, productivity in 2 or 3 years, I think it will grow the top line.
We actually have it already on the revenue side and two, two sides. One is in pricing. Using AI in pricing, can be.
Pricing.
Pricing, pricing for clients. And the other part is avoiding negative revenues because we avoid fraud. So we use AI in our customer onboarding to detect fraud cases and therefore prevent, negative revenues. And it's very.
Saving money.
Saving money. Yeah.
I do want to open it up.
I would say.
Just to your.
Original point that nobody jumped on. We partner with fintechs all the time on our value chain. But one of the biggest risks of partnering with fintech is cyber defense. And when you see the amount of third party supplier hacks, that's.
When they're more vulnerable.
They're more vulnerable.
Not spending as.
Much of that $6 billion. We're spending $500 million on cyber defense. Yeah, and it's growing. It's growing at a double digit K kegger every year. And therefore defending your perimeter, defending your your tech stack. When you put these small fintechs into your tech stack, that's where your vulnerabilities are right now. And that's that's a differentiator. So as we think about bringing a fintech into our tech stack, we have to think long and hard about it. How much are they spending on cyber and the regulator our regulator is testing for that. It's like are you running simulations disaster recovery in your tech stack with your smaller fintechs?
Yeah. Third party risk management is a key, key topic in the amendment on our agenda. Because of that.
I want to open it up. And I feel like Susan should respond to that.
This is a big topic. I mean, AI is effectively weaponizing every. every Joe Schmo to become a cyber aficionado. The reality is it's not just fintechs that are at risk. It's not just banks that are at risk. It's every business that's out there. Because the ability to clone, replicate, to deceive is much higher. So I think every company is obligated to spend a great deal of time and money. I mean, we spend hundreds of millions of dollars, if not billions, just on cyber fraud security. That is the core. I mean, our business is in 200 markets around the world. Running the core means you are running a regulated base case. And then on top of that, you're continuing to innovate. And in the world we're innovating in where the channels are increasing exponentially. And the actors, especially if you move into an agent to agent interface where commerce is happening in the near future. Those are both important trends. These are generational trends that we will all be a witness to. But to be responsible in that arena requires a great deal of protection. So yes, we're relying on our bank partners to do more, to do better. Not every bank is like David's bank. Not every bank is like Commerce Bank. The reality is, there are many small banks that have just as much exposure on the edges of their businesses as any new fintech. So back to where we started and where we should end, which is the way the world moves, is based on trust. It is in all of our best interests to be collaborative, not just with the regulators, with banks, with merchants, with consumers, and educate everyone about their role and responsibility to create more trust so that economies can grow. We cannot do it alone.
I do want to spending $1 billion on cyber. How much do you want her to spend? David for fintech.
Every fintech is different, though some are small. And so the vulnerabilities are right.
So yeah okay. Can we take a question or two please. Thank you. If you could just stand up and they'll bring you a microphone and quickly tell us who you are and what you'd like to know.
John Winter, Lloyds Bank, maybe just building on that point, the fastest growing area of crime in the UK is, payment fraud. And so I guess two questions is the answer increased. And most of that payment fraud, the majority of it originates outside the banking system. So is the answer. Increased regulation of fintechs and the tech companies or something else. And number two, who should pay redress to customers for the fraud that's inflicted on them.
Does anybody want to take it?
The theme that was discussed at the IMF in Washington in the fall is there's a few social media platforms where a significant amount of the customer fraud is perpetuated. And one of those is meta, meta Facebook. And we see a significant amount of impersonation of executives on there and phishing for information on meta. So we do have to work more collaboratively with meta financial system and the regulatory system to kind of fight that fraud, because it is significant. And I think most bank CEOs that I talk to say, you know, there's a couple of platforms where that fraud is perpetuated and then there's a lot of internal fraud, like your employee can get phished and then fraudsters take that access to your outlook or your, your corporate directory, and then they use social engineering. They go into TikTok, they go into Instagram, they go into your Facebook, and they can re-engineer your passwords based on your profile. And then they can get into your core systems. So you're defending against a number of vectors from outside and inside the organization. And that's why you're spending hundreds and hundreds of millions of dollars to defend. And then quantum's coming.
And do you want to take education, right? I mean, you need to educate people constantly, employees, but also clients. And I mean, we have a reach out. We have a group which is doing nothing else than reaching out to clients when our fraud system detect payments like this typical €100 to someone where you think, why are they doing that? And then our call center calls them up clients on an individual basis and saying, why are you doing that? And then they're saying, oh, I saw this. €100 will be in four weeks, €500, and then it becomes installment. People lose 10,000, €20,000 on that because they start and they get kicked in with the snowball system. And what you can do as bank is, is inform them, reach out, and make sure that that they know about it. Same with the staff. But at the very end, I think it's also the responsibility then of of the clients. We can only support them. But I'm for example, not of the opinion. And there is a debate in the EU ongoing who's going to pay for the damage. And I think that is not the part of the the bank. Just because we are executing the payments, that we should take the damage because we are causing the damage.
Final word.
He's right that, we have witnessed, increasing fraud in the market. And I believe I strongly believe that this is a double effort from the regulator and, banks as well. They must take into place. Regulator must make sure that they have in place, data protection and privacy protection regulation. And the banks also, they need to work to mitigate the risk. However, what caused that is that the people behavior has changed. People now are more relying on using, digitalization and technology. So that increased the risk. One of the area that, we must also, take it seriously is making, educational campaign to the customers by the regulator and by the customer by the banks. We urge the bank that to have a nearly yearly basis, campaign to educate their customers, and to protect them. And also, as a regulator, we make campaign regarding, you know, those type of frauds in the market. We cannot eliminate, this fraud, but we can mitigate the risk by the right regulation and the right also system in place by the banks.
Okay, I think we're out of time, but I want to I want to final question. Just to show of hands so we can get it on the record. Does AI make the banking system ultimately more safe? Yes, yes. Raise your hand if you think so.
Yes.
More safe. More safe. We're talking about safety and technology.
Innovation requires.
A response.
Nobody thinks it will happen.
So what are we doing?
We don't know yet.
I think we know.
It's. Make it more efficient. Reduce cost, you know, enhance profitability, but making it more safe. It's that a lot of factors that can make banks safe, not just an AI.
Okay.
That's one of them. AI can use the technology, but it's not just an AI.
Okay. Well, I guess maybe we'll meet again in a year and talk about whether that's true or not. Thank you all very much for contributing. Great discussion. Thank you very much, John. It will.
Come to your conference in March. I think.