Modernising the Machine Inside the Transformation of Traditional Banking

Salem and welcome everyone. We have an incredibly esteemed panel uh here with us today and looking forward to getting deep into our topic in the time that we've been given. So, but I'm going to start just to make sure everyone's concentrating out there in the audience and and and also to just make sure my my panel are warmed up. A bit of a tricky uh question probably. Um so, Mustafa, I'm going to start with you.

Are we in an AI AI bubble? Yes or no?

I would say there are sign of bubbles i.e. revenue are going are slower than valuation there are more concentration but I would say there's huge opportunity here so long term I would say no

okay and Christos same question to you are we in an AI bubble

I would I would say no because uh the productivity that we will all experience from um you know the the in the AI era is going to be such that there is a lot of development and there's a lot of value to be created. So my two sense is we have a lot of uh gains to see out of this great era.

Okay. And Jamal

look uh I think the the bubble is definitely in the valuations not the value. Um it's like electricity in the 1920s everyone was out selling generators and a lot of those companies you know went bankrupt. But at the end of the day all businesses run on electricity. At Alhill, we're we're all about using that electricity to power better banking and you know, it's not as exciting to talk about, but more valuable to execute.

Thank you. So, Mustafa, I'm going to come to you first. You know, you're the executive vice president and the and the chief operating officer of State Street Bank. And State Street Bank is one of the largest asset managers and asset services globally. You hold a staggering 51.

7 trillion in assets and 11% of the world's financial assets flow through its doors every day. I've got to say, apart from the jet lag, how do you sleep with that much responsibility on your shoulders?

I think apart of the jet lag, I sleep very well. [laughter] But seriously, I think the the the trust factor in your industry um is is is is huge. It's a it's a it's a it's a it's a huge element. Um artificial intelligence has obviously been used by banks for for a decade now. But but where are you now on your artificial intelligence journey?

Yeah, I think you mentioned the scale of our business. It's important. So he's our business is about delivery efficiency for our clients. We deliver service operational service. We move capital across 100 uh I would say countries in the world.

It's an important imperative for us to continue delivering speed, quality, efficiency at low risk. So AI has been I would say in our journey for a while now for multi-year historically with traditional AI mainly I would say around automation machine learning robotics uh diagn I would predictive AI where we are today is we're entering the generative AI and agentic AI changing completely the way we think about it and the way we we are approaching the topic as a nextgen transformation. We do believe that there is no AI without transforming the way we operate and there is no I would say transformation now without AI. So we call that nextgen transformation and the way we think about it is in three main buckets. One AI for growth.

So how AI would change the way we deliver service to our client client experience how we build product with AI. You mentioned 51 trillion of asset that's comes with a lot of data. How we can use this information to deliver value for our clients. Then you have AI for efficiency. And that's a big change is how agents and human will operate together what we call agentic factories ability to deliver at scale efficiency for our clients and then AI for employees and there is a high expectation from our employees now to be equipped with the right tools to be more productive and to augment their capability to deliver value.

So if you look at it holistically this is how we approach it. Just two words on what enabled that is two important topics which sometime are underestimated. one is the infrastructure and how you modernize your technology, your data centers, your cloud base. So that's core technology transformation is important and the other one is data and how data flow supporting that AI. So that's how we look at it more holistically with three key pillars leveraging agentic AI to speed our transformation.

Thank you Mustafa Christos. I'm I'm going to turn to you now, but first of all, I I I want to talk about Greece. Uh you know, you've just had the most staggering period of recovery in Greece. Um I was in your country in 2010 and you have had some very very tough years of austerity. And to Greece's absolute credit, you know, you are back with renewed confidence.

You have a fantastic prime minister, I must say, and you are now outperforming the Eurozone average. And I and I think that is something we should all recognize and probably a few more European countries should be looking to Greece for advice right now and how to cut back on expenditure. But this leads me to talk about artificial intelligence with you as the CEO of Pereus Bank because as Mustafa was just saying there's huge efficiencies um and development that can happen with artificial intelligence and on that note you have decided to invest 200 million in artificial intelligence over the next three years and this commitment aims to establish Pereas as the leading Greek bank in AI adoption. Why have you made this huge commitment as a CEO and where do you want the bank to be in three years time?

Thank you. Thank you Emily and thank you for the [clears throat] good words in in Greece. One thing that is worthwhile noting is that uh Greece now is is is funding its 10year bonds cheaper than uh Italy and cheaper than France. And of course the banking sector has been in the forefront of this growth. And I'm very proud to say that Pareos Bank has been one of the banks that have contributed significantly in the financing of the Greek economy and the results that we see now.

Now for us the uh the investment in AI is a natural evolution of all the work that we have done over the last few years actually in the crisis and after the crisis to modernize the bank to strengthen the governance to uh strengthen the culture and and change the culture of the bank to go into the digital uh journey 99% of Our transactions as we speak are uh digital and of course the next natural evolution is the investment in AI. We have been working on this for quite some time. uh we will be focusing on the areas where we can really have benefits be that uh the technology side, the operations, the front line digitizing and using AI in actually throughout the the chain of customer interaction to back office is what we are trying to do. We are very proud of what we have achieved so far with an AI enabled uh app which uh solves a lot of the qu queries of customers saving time for our employees to actually do client business and focusing on uh the future. what we want to be, we want to be one of uh the leaders in Europe in the forefront of uh using AI for benefit to the bottom line to our shareholders and and actually to for our customers.

So in in a few years from now, I hope we will be in a position to actually validate this statement.

Thank you. And Jamal, now to you. Al-Halhal Bank, valuesdriven Sharia Bank, very well-known legacy brand and you made an incredible transition to a full digital bank in 2019 and you're a legacy bank that made you know that is a huge transformation. What did you learn and what lies ahead in the next two years because the pace of change with AI adoption is getting ever faster? really really good question.

Um I guess if I break it down, there's like three key lessons uh learned. One, I think the transformation never stops. So you're just everything you're doing is effectively a milestone in a in in a plan that never ends, right? And you have to constantly keep up with change. That's the first one.

So don't think of it as it's it's one and done and then you can you can sit back, but that is never going to happen. Second, I think really investing in sort of data quality is far more uh important than the technology choices you make. Um, with legacy systems, what we learned is you're going to have data that is missing, duplicated, inconsistent, and trying to bring in AI on top of that. It's like putting AI onto some sort of quicksand. You're never going to realize the value that you need to.

So really spending the time um upfront to take care of that. And then the last uh learning was uh culture definitely moves way slower than code. So you can you you know getting technology in place is actually the easy part. Um, of course, moving people to not just have a shift in mindset, but do things a different way. Approach um sort of uh operations interactions in a with the mindset of a digital bank.

People have to unlearn what they've done before and often things that are, I would say, truths to a lot of individuals. Um, things that they've relied on with with very certain outcomes. you're now asking them to do things very differently with almost in their view very uncertain outcomes. I think looking forward what I see is is is obviously moving from digital banking to AI native banking bringing in that you know hyperpersonalization that everyone talks about intelligent operations as Christos just mentioned. Um, but more importantly, what I'm excited about is uh the shift to uh I would say conversational banking where you're now moving from app screens and interfaces to more natural language interfaces.

Um, and you're dealing with a very personalized uh agent uh or in traditional banking speak as a relationship manager that actually understands your behavior, understands your your life moments, your needs, your wants um and that can serve you best uh anytime you need it. So I think that's where we're going. I think the challenge is going to be not the tech. Again, the tech is pretty straightforward. It's going to be the governance around it.

Um how do you make sure that you know you still respecting Sharia values, customer values, um but also uh making sure you're in compliance with the regulator.

Thank you Jamal. Mustafa back back to you. Jamal touched on it. It's it's it's the human journey that's so important going alongside the technology. Um and there's quite a lot of discussion at the moment at the speed of AI adoption that the technology may move faster than the humans.

How are you embarking on this with your employees but also your clients but particularly with your employees bringing them on the journey and you know developing new skills because the technology is evolving so fast is skill development has and confidence actually with those new skills is so is so important

I think it's it's something we tend to underestimate a lot and Jamal mentioned learning And I will start from there. Learning means everyone need to learn and our approach to it. We start with our expo and we get an immersion for the whole executive committee on AI to understand what that means to understand what agentic means to understand what how agile works. It looks basics but it's important at the top that commitment of time learning start at the top of the firm. Then we are going through cohort of training of our leadership team and created the base for learning for our our people.

We have deployed now co-pilot to 26,000 people. We have a mandatory training through AI agentic. So that's kind of having the same knowledge, same language opportunity is important. That's number one. Number two, I think it's um as you think about the learning, you have as well the planning.

So our job as leaders as we know the change will happen with technology what are the jobs who will change and how are we working with our employees to help them doing that transition to the new jobs if not they will be disintermediated in that change. So that planning is important especially in a fast I would say changing environment then the engagement and people always support something they contribute building. So how get all teams developing being a part of that journey of transformation and what we learned historically we did a lot of use cases like everyone else and we've been out there like everyone else say this is how many use cases we do it's not delivering the value at scale we think so we changed completely our approach now we look at what you call bottomup experimentation in which we have more people involved into innovation and experimentation and top-down domain transformation information. So we looked at big part of our businesses and we say how we can transform the whole business with AI training the leaders of those business is businessled transformation with a kind of agile work with teams in different part of the organization delivering that that the only way you can deliver sustainable I would say scalable benefits at the same time engaging employees because they've been trained and they are part of the adventure we are we are driving now. Thank you.

I I if we have time I want to come back to you about a question about strategy to all of you actually because again when you are dealing with the pace of change you you need strategies set in place but these strategies are going to have to be nimble too but we'll come back to it because I'm watching that clock. Um Jamal I'm I'm going to carry on with the skills conversation with you. You began your career training as an engineer. What skills have you seen that I needed most to thrive and survive in this new era of artificial intelligence?

Look, I'm going to bring up obviously my own sort of personal experience here and then of course what I've seen at uh and experienced uh at Al-Hilal that's worked. I think the the one skill that my engineering background taught me was more the systems thinking, right? in um today everything we're building are complex systems and more importantly more specifically not just how systems connect where their dependencies lie and then how a change in one system can ripple through uh and impact something uh in other areas. I think that is uh sort of the one thing that I can really take away at least for me personally um from the the team uh at Al-Hilal. It's for sure I think intellectual curiosity over technical expertise.

I think we're very easy to just want to answer every technical question and and and solve every technical problem. But I think it's more around can we ask the right questions or the better questions. um look at for example AI and say okay let me understand how this works and then where can I apply it right versus let me just apply it right the second is I think the judgment uh when you have uh through uncertainty I think of course AI can help do a lot of the heavy lifting I think there are certain type of decision making that um of course when you look at uh whether it's Islamic values or even in the interest of the in the best interest of the customer there's some elements ments that you need a human sort of judgment call to come in. It's about understanding where you insert those points at the right places. Um you want to have that that balance.

Um and then you know I would say one key piece is what's called translation capability. you. That skill to be able to one minute be dealing with technical problems and then migrating over to strategy and then from another minute dealing with customer experience and then trying to balance regulatory obligations and or on one hand you know every organization's ambition for innovation and on the other hand looking at well what is operationally realistic right I think being able to bridge and individuals that can do that I think um uh fundamentally I think are going to be uh quite successful and I think the one piece that nobody ever really thinks about and I'll talk about it is it's actually humility. Um when you deal with these large systems you need to prepare for instances where they fail, right? And I think the best outcomes come when you can prepare for those uh failure scenarios.

Um AI systems are are no different. There will be occasions where they fail. How do you best deal with them? being open and honest about saying what you know and of course more importantly what you don't know and what you don't understand. I think that will go a long way.

I think it's good to be confident but some overconfidence can of course uh can create some problems. I think those are the ones that really stand out for me.

Thank you. Some great points then. And and Christos we're going to move we're going to move slightly here to digital assets. So can you talk us through the future of digital assets because that's something you've been working on a lot with Pereas and how do you see the resp you you know the bank responding to this you're a trusted institution what do you think customers are going to want from digital assets you know flexibility safety

Emily thank you for the question I cannot resist but just mentioning in such a great audience one great initi ative that we have been uh doing in pyos in Greece launching a neo bank which is uh 100% digital we call it snappy and actually we are disrupting ourselves with this uh launch so I I'll put that aside and I will talk about the digital assets now we are preparing uh and we will be offering digital assets to our clients in the first quarter of next year and I would say that for a regulated institution like most of the banks are digital assets will flourish when innovation meets regulation. So uh safety, clarity, seamless integration and execution is what our clients want in the digital asset world. the regulated institutions are perfect uh media for actually disseminating this to their customers and I think once innovation meets regulation we will have quite a lot of things to do in that front and as far as PAS is concerned we are focusing so we will offering to our clients uh digital assets in the first quarter of next year

very exciting Very exciting indeed. Now, we've got a couple of minutes.

So, we discussed a question quickly before we came out just in case we did have a couple of minutes to go and and we really have to keep this tight. I asked you what what you you thought where we would be in five years if we came back here and we all agreed. We didn't really know where we'd be in five years. So quickly each one of you you come back to this amazing stage this incredible conference in three years time what are you going to be talking about

Mustafa sorry

okay I agree with three years instead of five even three now is challenging as we speak I would say I think what will change maybe in three years we'll be here again is we'll have less question about how I think everyone everyone is trying incrementing thinking about how our business will look like how our uh technology will look like techn Technology is becoming the business and the companies who will thrive tomorrow and the companies will become a tech companies making it a part of the way we do business. So that will be interesting in three years speaking about the new generation technology but the level of adoption likely will change dramatically and knowledge will change dramatically.

Brilliant. Thank you Jamal. You have got 20 seconds. Look, I think I think what will be a constant theme I think we'll be back here and and what we'll still be talking about is with all of the tech and with all the advancement that have occurred, you know, where's that human element? How are we bringing that in?

And more importantly, back to the earlier point my my fellow panelists have brought up is how are we investing in that capability? At Al-Hilal, we're doing that continuously to make sure that we build capability. It's not just about cost reduction. We want to make sure that we're we're ready for anything that comes our way. And Christos again 20 seconds.

Loved it if we have a digitally enabled AI enabled AIdriven client experience that most importantly our customers are clients who are giving value to the institution really recognized as number one at least in Greece if not in Europe.

Thank you very much. Brilliant. We thank you so much for joining us today. Thank you so much to my esteemed panel. Thank you very much.