Can Apple and Google's in-device AI help banking?

The fall versions of some Apple devices (left) and Google Android phones (right) will have generative AI models built into their operating systems.

This week, Apple announced it's partnering with OpenAI to build generative AI into its next generation of smartphones, and Google made a similar announcement last month that it would build Gemini generative AI into its Android smartphone operating system.

It's still early days, and it's unclear whether Apple and Google will open up the technology for others to customize or adapt — Apple and Google didn't respond to requests for comment — but experts say the new technology could create opportunities for banks, fintechs and their customers.

“You'll be amazed at how quickly your phone will transform from a pocket computer into an intelligent assistant,” says Alenka Grealish, principal analyst at Celent. “The impact on banking will be enormous, because generative AI is clearly taking us to a new wave. [user-interface-less] Banking.”

“Apple and Google are clearly competing to see who can pack the most 'smart' stuff into their phones, knowing that more AI capabilities will increase consumer and app developer satisfaction,” said Jim Perry, senior strategist at Market Insights. “These advances are causing us to rethink how we use our smartphones on a daily basis.”

Apple is adding generative AI features to iOS 18, iPadOS 18, and MacOS Sequoia. It is upgrading its voice assistant, Siri, to be able to communicate via text messages. When Siri is stumped by a question, it will ask the user if they want to ask ChatGPT. Apple is also adding summarization, rewriting, and proofreading features to iPhone native apps like Notes, Mail, and Pages. In the Notes and Phone apps, users can record conversations and get a transcript and an AI summary of that transcript.

“Apple was long overdue to get into the AI ​​generation game,” said Zoll Gorelov, CEO of Kashisto Inc. “I think Siri needed to be improved.”

Google's Gemini for Android will also be a generative AI assistant. Users can drag and drop generated images into places like Gmail, Google Messages, and tap “Ask about this video” to search for specific information within a YouTube video. Gemini Advanced lets you use “Ask about this PDF” to get instant answers without actually reading the document. Gemini Nano, which is the name for Google's on-device AI, will work with TalkBack to help people who are blind or have low vision understand more clearly what's going on in an image. Nano will also try to identify fraud.

Fraud Detection

Google is currently testing a feature in Nano that will provide real-time alerts during a call if it detects speech patterns common to scams.

“For example, you'll receive an alert if a 'bank representative' asks you to urgently transfer funds, pay with a gift card, or requests personal information like your card PIN or password – requests that are unusual for banks,” the company said in a blog post. “All of this protection happens on your device, so the content of your conversations is visible only to you.”

This feature could be useful without any action on the part of the bank, if consumers opt in and it works well.

“I'm not sure that people want AI to listen to their phone calls and detect whether they're getting spam calls that they don't want to receive,” Gorelov said. “If it can detect scams and filter out spam calls, I'm all for it. But if AI is using it to target ads, that's really annoying.”

Both Google and Apple have announced they are building data privacy into their on-device AI.

Personalization

As mobile-based intelligent assistants become more adept at understanding consumer instructions and crafting responses, both banks and consumers will become accustomed to using them in new ways, Grealish said.

“It's entirely feasible in the near future that you'll be able to talk to your mobile wallet and ask it to choose the best card for, say, car rental, based on the points you've earned and your liability insurance coverage,” Grealish said. Relatedly, generative AI can lead to improved language translation, allowing mobile banking to support customers in almost any language.

Futurist and “Breaking Banks” host Brett King has long envisioned personalized AI assistants that work across devices — he first wrote about the concept in his 2015 book “Augmented” — but that reality is still a few years away.

“For the time being, you're going to have to use Apple's AI system or Google's AI system or Amazon's AI system,” he said in an interview on Wednesday.

King said the biggest impact that the inclusion of AI in smartphones will have on banks is the competitive advantage it could give mobile wallet providers. Worldpay's 2024 Global Payments Report predicts that by 2027, 61% of all payments will be made through mobile wallets. In 2023, 50% of payments were made through mobile wallets.

“If you want to take more business away from the banks, what do you do?” King said of fintech mobile wallet providers. “You integrate artificial intelligence into your wallet architecture, you provide AI-based money management capabilities, you have an AI money coach that's trained on your behavior and financial needs, and you activate a built-in learning engine that helps you make smarter financial, credit and savings decisions.”

But traditional banks also have an opportunity in this scenario, King said.

“If you have a bank account that's abstracted by AI, the bank becomes just a conduit,” he says. “But there's another element to this: If you're asking an AI to act as an agent to perform financial activities, can you really trust that the AI ​​is trustworthy and that it's not going to create illusions on the way to transferring funds to your bank account? So integrating banking architectures into this AI-based cloud stack is one way that these players can ensure the trustworthiness of their platforms.”

To take advantage of this opportunity, banks will need to integrate with these third-party wallet systems.

Small Language Models

Gorelov said the on-device AI upgrades from Apple and Google are part of a trend toward using smaller language models, which use fewer parameters than larger ones.

“These models are small, optimized for specific use cases, and can be put on devices,” Gorelov said. “They're easy to train and operate, and they enable very powerful use cases,” such as email and image generation and personalization, he said.

“Overall, putting generative AI on devices is very promising both from a privacy perspective and from a use case perspective,” Gorelov said, “and the small language models are powerful enough to enable some very powerful use cases.”

But this new technology isn't available to everyone: Consumers use a variety of iPhone and Android device versions with different levels of functionality.

“We appear to be rapidly approaching a time when the digital divide will be measured by the version of the phone you carry and whether that phone can support new AI features,” Perry said. “For banks, the usefulness of these new tools will depend in part on the compatibility of the devices you use. The more Apple and Google roll out AI enhancements to phones within the limitations of existing hardware, the greater the chance that a majority of consumers will change their behavior.”

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