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As the US moves towards open banking, cloud technology is driving AI innovation
The US is going all-in on AI, with spending projected to hit a massive $120 billion by the end of 2025, a 26% annual growth rate. This means that the country will be responsible for over half of all global AI spending and the banking industry is responsible for driving a large portion of these investments.
Retail is expected to lead the pack, but banking is a close second. These two giants alone will make up almost 28% of all US AI investments by 2025, pouring nearly $20 billion into the overall growth of the market.
The rise of AI in banking is linked to the dawn of ‘Open Banking’ protocols in the US. The ‘Personal Financial Data Rights’ rule was formally presented in October of 2024, in a move that supports open application programming interfaces to drive innovative digital products and more personalized financial services for consumers.
As a result, it’s likely that the banking sector will undergo significant changes in 2025 as these protocols help to deliver more secure digital ecosystems that support AI innovation.
The future of fintech lies in the cloud
It’s no secret that AI has huge potential within the banking sector. However, cloud technologies are expected to drive adoption further. The real promise with most AI solutions lies in their ability to react and respond in real-time. Here, cloud computing platforms built specifically for the banking sector promise to act as the critical layer between native fintech apps and live financial data.
“When you look at the future technology waves in banking, generative AI will play a big part. We see great value in the ability to leverage cloud-based banking infrastructure to apply GenAI to banking processes and data to create new business propositions that will provide banks the opportunity to improve operating efficiencies while creating new niche business cases,” explains Ryaz Syed, CEO of Infinant.
As this trend continues to play out we’re likely to see banks expand their reach and connect with new customers with AI-powered solutions such as virtual assistants that can help with complicated loan applications.
Creating a feature like this from scratch requires a sizable investment but cloud ecosystems and development platforms are helping smaller, independent banks stay at the cutting edge of tech.
For example, Bankwell Bank in New Canaan, Connecticut, is trying this out, using AI copilot to handle much of the heavy lifting, from verifying data and determining eligibility to even approving loans. In turn, this frees up time for specialists to focus on other areas of business development.
Meanwhile JPMorgan is using generative AI to enhance its customer service at Chase Bank. They’ve been quietly equipping their call center agents with AI-powered tools from providers like OpenAI, which should translate to faster, more efficient customer assistance.
Cloud technology is revolutionizing banking beyond cost savings. It’s transforming operations and enabling rapid product launches—a huge advantage in today’s fast-paced financial world.
Infinant’s platform helps banks modernize outdated systems, bringing new products to market to either capture new customers or expand the offering to existing customers. For example, AI could help to rapidly create a tailored, digital brand for healthcare professionals with specialized financial products. Highly targeted products promise to attract more customers and improve user experiences through personalized finance solutions.
Partnered with Amazon Web Services to provide the elastic and resilient infrastructure needed to house their platform services and data, Syed explains, “We are able to provide secure, dedicated instances for each of our banks to meet the highest information security requirements while delivering the banking infrastructure at a fraction of legacy data center costs”.
This differs from legacy core providers, which often still operate in dedicated, private data centers that require dedicated hardware from the start to meet peak volumes.
The “Banking-as-a-Service” model
With $15 million Series A funding, Infinant is poised to accelerate its mission of transforming the banking industry.
Syed believes that the bank of the future will continue to be more than just a place to deposit your paycheck. Banks will continue to evolve from a geographic footprint to a digital footprint with a diversified multi-channel digital strategy.
Banks will provide a platform that allows the bank’s digital channels along with the bank’s partners – fintech companies, merchants, and Fortune 500 businesses – to embed financial products directly into their offerings. The market refers to these use cases as Embedded Banking and it is powered by a platform that exposes Bank-provided APIs or a “Banking-as-a-Service” model to create a vibrant ecosystem of innovation and collaboration.
“Banks must still create and regulate the financial products, but the last mile of delivery is changing – owned by another entity (fintech app, merchant app, Fortune 500 employee app, etc). This creates an opportunity for the bank to find new distribution channels for their products, which can improve efficiency in gaining deposits and fees.”
The cost savings associated with cloud-based banking are significant. Syed mentioned that banks can save up to 10x on the cost of maintaining an account. “When dealing with hundreds of thousands of accounts,” he said, “this creates a new economic model and one that can dramatically improve NIM and improve operating efficiency.”