AI pressures banks to rebuild the financial stack

AI is presented as a larger shift for financial services than earlier waves such as internet banking, mobile distribution, digitization and cloud computing. The technology is moving through the industry layer by layer, turning client conversations into structured intelligence, compressing investment banking analysis, reworking tax filing, automating consumer banking relationships and handling regulated customer service queries that older chatbots could not resolve.

The biggest economic impact is expected to come from driving the marginal cost of core functions toward zero, including loan underwriting, compliance reviews and customer service at 2 a.m. That shift could enable more individualized products, including credit that adjusts with daily cash flows and insurance priced to individual circumstances rather than broad actuarial averages.

Fintech startups are described as better positioned to move quickly because of shorter decision cycles and a greater willingness to rebuild around new capabilities. Incumbent banks and insurers hold deep proprietary datasets, but legacy systems and defensive organizations risk leaving that advantage unused. The competitive divide is likely to favor institutions willing to cannibalize existing models and rebuild their technology and talent around AI.