AI vs. Banks – The End of Easy Profits

A seismic shift is underway in retail banking, and its epicenter is artificial intelligence. AI-powered financial assistants are evolving from novelties into the primary interface between customers and their money.

As Klarna CEO Sebastian Siemiatkowski outlines, these digital agents will autonomously switch accounts, refinance loans, and optimize portfolios, effectively commoditizing traditional banks.

In this new era, banks risk being relegated to the role of invisible, low-margin balance sheets, competing solely on cost, liquidity, and risk management. This frictionless customer mobility signals the end of easy profits derived from consumer inertia.

The mandate for survival is clear: either become a hyper-efficient utility or evolve into the intelligent digital ecosystem that owns the customer relationship.

The Great Unbundling: Banking as a Background Utility

For decades, banking has profited from friction. The hassle of comparing products, transferring direct debits, and filling out paperwork created a moat of customer inertia. That moat is evaporating.

AI assistants are becoming the consumer’s unbiased financial champion. They will operate with a simple mandate: “Improve my financial position.” They will scan the market for better mortgage rates, higher savings yields, and lower fees, executing complex switches in the background with a single voice command or tap.

In this world, the bank brand loses its power. If the assistant is the trusted advisor, the underlying financial institution becomes a utility, an invisible engine of capital. The competitive frontier is no longer about who holds the deposits, but who delivers the best, most transparent outcomes for the customer.

For markets like Botswana and across Southern Africa, this presents a unique opportunity to leapfrog legacy systems, but it also exposes established players to hyper-agile competition.

The Two Paths Forward: Dumb Pipe or Smart Hub?

Legacy banks are exposed at their core. Their aging architecture slows innovation, and their brand identity is at risk of being diluted into irrelevance. Two strategic pathways emerge from this disruption:

• The Balance Sheet Specialist (The “Dumb Pipe”): This model focuses on operational excellence. It means competing on the cost of funds, disciplined risk management, and providing seamless, open infrastructure for assistants to plug into. It is a high-volume, low-margin game where scale and efficiency are everything.

• The Digital Financial System (The “Smart Hub”): This model is about owning the customer relationship. It requires building or acquiring a best-in-class assistant, controlling the data layer, and creating an ecosystem of services that generates deep user engagement. This is the harder path, but it defends the core profit pool.

The Workforce and Regulatory Realities

1. The Automation Dividend: This shift will fundamentally alter banking labor economics. The focus must be on productivity, not just cost-cutting.

• Rising Revenue Per Employee: Headcounts will shrink, but the value generated by each employee will soar.

• The Humane Transition: The goal should be to hire fewer people but pay them more, while aggressively upskilling existing teams in AI literacy, data science, and system oversight.

2. The Geopolitical Balancing Act: Regulation will be a tightrope walk. Over-regulate, and you cede innovation to faster, less-constrained global players. Under-regulate, and you risk systemic shocks from ultra-mobile deposits creating unprecedented liquidity volatility.

• Africa’s Opportunity: With forward-thinking policies around open banking and data mobility, African nations can create a competitive advantage, fostering financial inclusion and positioning the continent as a leader in agentic finance.

The Mandate for Leaders: Boards and Regulators

The time for incremental change is over. Survival demands decisive action.

• Redefine the Perimeter: Regulators must recognize the AI assistant as a new, systemically important entity and develop frameworks for its oversight.

• Separate Innovation from Stability: Banks need to operate with a dual mindset. Protect the balance sheet with conservative risk management while funding an agile, independent innovation arm to build the tools for the new era.

• Invest in Compute, Not Just Compliance: Future competitiveness will be defined by data infrastructure and AI readiness. This is no longer an IT expense; it is the core strategic investment.

Conclusion

AI is not just another tool for banks; it is the force rewriting the laws of financial competition. The winners of the next decade will not be the biggest banks, but the smartest systems. Legacy institutions must make a choice: become the invisible, hyper-efficient utility that powers finance, or become the intelligent assistant that empowers people. Trying to be both may mean failing at each.