by Dharmesh Mistry
Banking Technology Revolution
We are in the midst of the next banking technology revolution. Few visionary banks have started to lay the groundwork for this revolution by adopting MACH architecture (microservices, API-first, Cloud-native and Headless). MACH is key to making banks composable rather than the rigid silos they have today. This in itself is a transformation journey not just a project. However, beyond MACH, the next stage of that journey is already upon us and it is called “Agentic Banking”. This is not about chatbots and using generative AI, it is a fundamental shift towards making the bank much more dynamic and responsive to change right down to an individual customer level!
The transformation to MACH architecture has already demonstrated significant benefits for early adopters, including increased agility, faster time-to-market for new features, and improved scalability. These advantages create the perfect foundation for the next evolutionary step: agentic banking platforms that can truly transform the financial services landscape.
Old Habits
Some banks pride themselves on implementing cutting-edge generative AI solutions, but these often amount to sophisticated point solutions: a GPT model for customer service here, an AI-driven risk assessment tool there. This is the same fragmented approach that has got them to have a disjointed patchwork of disparate systems based on different genres of technology. Whilst it’s good to understand this new technology with a single implementation, letting departments exploit it independently is a mistake. Once banks understand the full transformative potential of truly integrated AI systems a plan for a more strategic and holistic approach can be created.
This fragmented approach creates several challenges: duplicate data storage, inconsistent customer experiences, increased operational costs, and missed opportunities for cross-functional insights. Moreover, maintaining multiple AI systems across different departments leads to higher technical debt and complexity in system integration. Banks must break free from these traditional patterns to remain competitive in an increasingly digital financial landscape.
Agentic Banking Architecture
Technically in very simplistic terms it is about embedding AI across all the systems in the bank. It is about replacing workflows and business rules/logic with dynamic decisions backed by data. Agentic banking will transcend siloed systems by leveraging API’s to interact directly with source systems rather than having to copy data or have it manually rekeyed by humans. Recently in an interview Microsoft CEO Satya Nadella goes further to say that “AI agents are poised to render traditional SaaS applications obsolete”.
The technical architecture required for agentic banking consists of several crucial layers:
- Data Foundation Layer: A unified data platform that enables real-time access and processing of all banking data, from customer interactions to market information.
- AI Agent Layer: Specialized agents designed for specific banking functions, each with its own expertise and decision-making capabilities.
- Orchestration Layer: Sophisticated systems managing agent interactions, ensuring coordinated actions and maintaining operational integrity.
- Security and Compliance Layer: Embedded controls ensuring all agent actions adhere to regulatory requirements and security protocols.
Imagine a unified banking platform where intelligent agents collaborate seamlessly:
- A risk assessment agent identifies market opportunities and potential threats in real-time
- Trading agents automatically evaluate and execute opportunities within compliance boundaries
- Portfolio management agents dynamically adjust client positions based on market conditions
- Customer communication agents proactively engage clients with personalized insights and recommendations
- Fraud detection agents continuously monitor transactions and adapt to new threat patterns
- Regulatory compliance agents ensure all operations meet current legislative requirements
- Product recommendation agents create personalized financial solutions based on individual customer needs and behaviour
This orchestrated intelligence operates at scale, transforming how banks serve their customers and manage risk. The platform requires sophisticated orchestration layers managing agent interactions while maintaining strict security protocols and regulatory compliance by design.
The Future Envisioned
In my previous article, “A day in the life of Frank”, I presented a story of a banking customer of the future. In this story much of the characters life was being orchestrated by his bank. This really was just one example of how agentic banking could fundamentally change the role of a bank by allowing it to be more deeply embedded into customer lives.
The potential applications of agentic banking extend far beyond traditional banking services. Consider these scenarios:
- Predictive financial planning that adapts in real-time to life events
- Automated investment strategies that respond in real-time to market changes and personal circumstances
- Proactive risk management that anticipates and mitigates potential financial challenges
- Seamless integration with other aspects of customers’ digital lives, from shopping, travel, work or healthcare planning
Implementation Challenges
The transition to agentic banking presents several significant challenges that banks must address:
- Technical Infrastructure: Building and maintaining the required sophisticated infrastructure while ensuring system reliability and performance.
- Data Quality and Integration: Ensuring data accuracy and accessibility across all systems while maintaining privacy and security.
- Regulatory Compliance: Navigating complex regulatory requirements while implementing autonomous AI systems.
- Change Management: Training staff and adapting organizational structures to work effectively with AI agents.
Conclusion
By now some of you will question whether this is possible, and some will question whether their bank wants this. However, I would ask banks to consider if their competitor(s) decide to move in this direction, what will the fate of banks that don’t move towards agentic banking? Those who embrace this transformation early will gain a significant competitive advantage, as agentic platforms represent more than a technological upgrade – they represent a fundamental reimagining of banking operations for the digital age.
The transition to agentic banking is not just an option but a necessity for financial institutions aiming to remain relevant in an increasingly automated and personalized financial services landscape. The question is no longer whether to make this transition, but how quickly and effectively banks can implement this transformative technology while maintaining the trust and security their customers expect.