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Neobanks Versus Westpac When It Comes to Artificial Intelligence

  • November 23, 2019 08:00 AM AEDT
  • Team Kalkine
Neobanks Versus Westpac When It Comes to Artificial Intelligence

In the today’s world, digital disruption is redefining the way companies operate. Companies in almost every sector are looking for new ways and adopting technologies that can help them create value in this tech-driven world.

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In this article, we are discussing the banking sector, which is also witnessing a remarkable change, with the growing adoption of technologies to better serve the customers. Banks are trying to be more customer focused, as they are targeting to meet their customers’ expectations of a seamless experience in their day-to-day transactions.

In this fast-moving life, an individual expects everything with a single click. To boost their customer base, banks are adopting technologies and looking for solutions so that their customers have a better experience. Banks have extended their horizon to retail, IT and telecommunication, enabling customers to avail almost every type of service at their fingertips such as mobile banking, e-banking, and real-time money transfer.

As Artificial Intelligence (AI) brings along the power of advanced data analytics, it would not be incorrect to say that it would change the way banking sector operates in the long run. The power of advanced data analytics can be felt when fraudulent transactions such as money laundering activities can be easily traced with the implementation of the AI technology.

Not just in managing vast database easily in seconds which earlier took days and months, AI helps the banks to provide a better customer experience.

  • Using the AI technology, banks can easily study the behaviour and pattern of their customers based on their past records.
  • Banks can study the pattern of their customers and predict future outcomes. For example, Person A belongs to the salaried class, and suddenly heavy transactions are observed in his/her bank account on a regular basis. Studying the pattern of the banking transaction, it can be found whether the person is involved in any offensive activities. In short, AI supports in fraud management.
  • Chatbots is another feature of Artificial Intelligence adopted by banks to provide better customer experience. Customers can raise their query, and these chatbots identify the context and the emotion and respond to the customers, accordingly, thus saving time and money of the bank.

Let us discuss two banking techniques i.e. neobanking and traditional banking with respect to Artificial Intelligence. In traditional banking, we have covered Westpac Banking Corporation as the example.


Neobanking is a buzzword in the financial technology industry. Neobank is a budding concept and is a type of direct bank that is entirely digital. These banks reach their customers through mobile apps and personal computer platforms. These banks do not operate like traditional physical branch networks. Instead, they provide services online. Neobanks are technology-driven and can adopt machine learning and artificial intelligence technologies, although not being restricted by legacy systems of traditional banking players.

As neobanks are completely digital, they provide their customers with customised services via technology. Neobank’s data-driven decisions drive the decision-making procedure.

Advantages of Neobanks:

Being digital in nature, neobanking has below-mentioned advantages:

  • Opening an account in these banks is hassle-free as compared to traditional banks. Account creation is possible following a couple of steps as per user convenience from any location and through the phones.
  • Users can make a seamless international payment.
  • Neobank apps have a user-friendly interface. They aim to provide customers with an excellent experience.
  • Transactions made through neobanks are immediate, and the details of the transactions get populated instantly, giving the user an instant position of the account balance.

Disadvantages of Neobanks:

  • No branch access;
  • They do not provide access to cash or ATMs;
  • Neobanks have limited product offerings;
  • The major threat of these banks is related to the security and safety of their money.

Customers generally have concerns regarding the safety of their money. However, any bank in Australia whether neobank or traditional bank is required to have an Authorised Deposit-Taking Institution (ADI) authorised by APRA. Apart from that, there is detailed screening involved in the ADI application process. Money held by an ADI is also covered (to a level) by the Australian Government.

Technology behind Neobanks:

Both traditional banks and neobanks offer similar services. The only thing that makes neobanks different from traditional banks is their hyper-improved and personalised customer experience. They have considerably leaner business models and enhanced technologies at their end. Owing to which, they provide hassle-free account creation, 24X7 customer service aided by chatbots and real-time cross border payments along with artificial intelligence (AI) and machine learning (ML)-enabled computerised accounting, budgeting as well as treasury services.

Westpac Banking Corporation (ASX: WBC)

Westpac Banking Corporation (ASX: WBC) is the oldest bank in Australia, counted amongst the four major banking organisations in the country and one of the largest banks in New Zealand. Westpac is engaged in providing a wide variety of banking and financial services like consumer, business as well as institutional banking along with wealth management services in these markets. WBC’s offices are in London, New York, Hong Kong and Singapore.

Artificial Intelligence - Westpac:

Launch of Chatbots:

Just like neobanking, traditional banks are also in the race when it comes to taking advantage of the Artificial Intelligence.

An example of this is WBC, which in the month of May 2019, rolled out Red, a new chatbot, powered by IBM’s Watson AI conversational engine. The chatbot was earlier made available to customers through desktop online banking in December 2018 and was offered to selected customers using WBC’s mobile app during early 2019.

The objective behind the launch of the Red chatbot is to reduce the number of queries coming into the bank’s call centres. Through this, the company would also be able to lower its costs.

The plus point of Westpac’s Chatbot is that it has been trained to identify over 5,000 different ways a customer asks about ~ 100 tasks related to banking.

Data Driven Experience Platform:

In mid-November 2019, the bank updated the market regarding the roll out of the Data Driven Experience Platform. This is a Microsoft Azure-based data hub that extracts data across the group and provides insights to the bank’s customer base on a real-time and customised basis.

The platform, which was built using investment and engineering resources from Westpac and Microsoft, is designed to push Westpac towards leading the world of digital banking. The platform would lay a foundation for instantaneous data analytics throughout the bank as well as use machine learning and other Azure cognitive services to aid in the decision-making process and improve customer interaction to provide them with more customised services, based on a better understanding of customer behaviour and pattern.


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