Davos Signals a Disciplined Era for AI in Banking and FinTech

The path forward depends on trust, collaboration and regulation that enables innovation without weakening resilience.

The Tuesday (Jan. 20) Davos panel, titled “Banking Accelerated,” brought together a mix of incumbents, disruptors and regulators to examine how artificial intelligence, digital banking and platform economics are reshaping global finance.

Moderated by CNBC anchor Sara Eisen, the discussion featured Commerzbank CEO Bettina Orlopp, Qatar Central Bank Governor Sheikh Bandar Bin Mohammed Bin Saoud Al-Thani, Banco BTG Pactual Chairman and Senior Partner André Esteves, Royal Bank of Canada (RBC) President and CEO David McKay, and PayPal Global Markets President Suzan Kereere.

The consensus was clear early on. Banking’s future will not be determined by technology alone, but by how effectively institutions earn and preserve trust while deploying it at scale.

Frenemies in a Digital Value Chain

The relationship between banks and FinTechs was repeatedly described as competitive and cooperative at the same time. McKay characterized PayPal, Apple and other platforms as “frenemies,” noting that banks increasingly rely on partners even as they compete across payments, wallets and commerce journeys.

For RBC, digitization has meant moving beyond transactions into discovery and decision-making. McKay warned that if banks remain “just the last mile of payments,” they risk being disintermediated. Instead, RBC has expanded into areas such as home search, small-business formation and eCommerce, embedding financial services earlier in the customer journey, he said.

That strategy reflects a broader shift. Banks are no longer competing only with one another but with ecosystems that control devices, data and consumer interfaces.

Trust as the Core Competitive Advantage

Kereere argued that no institution, bank or FinTech, can win without trust. She described trust as the “real network effect that actually stimulates commerce,” adding that “we’re all chasing the same thing,” encompassing the safe handling of money, data and identity, as well as transparency in lending and pricing.

Scale, Trust and the Risk of Being Disintermediated

McKay returned repeatedly to the idea that banks still compete on trust and scale, but those advantages only hold if institutions move up the value chain. Digitization, he said, is not just about automating existing processes but rethinking how services are delivered end to end.

Artificial intelligence plays a central role in that transformation, from machine learning in early digitization efforts to generative and agentic AI today. Yet McKay stressed that banks remain cautious, particularly when deploying AI directly into customer-facing environments, due to the risk of model errors and hallucinations.

Digital Friction and the Evolving Role of the Branch

Despite the push toward digital, panelists agreed that friction remains pervasive. Orlopp noted that Commerzbank must serve both digital-native customers and those who still rely on branches and human interaction.

AI, she said, is helping bridge that gap. Agent-assist tools in call centers speed service for customers who want human support, while digital platforms continue to expand. The result is not the elimination of branches but their reinvention.

McKay echoed that view, describing how RBC has turned branches into multi-channel hubs where staff handle in-person service, chat and call-center work simultaneously. Productivity gains, not physical expansion, are redefining branch economics.

Collaboration as a Structural Requirement

Across the panel, collaboration emerged as a necessity rather than a strategic choice. Kereere argued that competition alone cannot remove friction from commerce, lending and cross-border payments. Banks, FinTechs and regulators must work together to close gaps that limit growth for consumers and small businesses.

Esteves offered a similar perspective from Brazil, where fast payments infrastructure and digital banking adoption have surged. He warned that while innovation has lowered costs and expanded access, regulatory arbitrage between banks, FinTechs and other financial actors remains a risk.

BTG Pactual’s journey highlights how wholesale banks have embraced digital models. Esteves explained that the bank launched its digital platform a decade ago, allowing it to offer full-service retail banking without a branch network.

Still, he emphasized the continued importance of human interaction, particularly in wealth management and complex financial decisions. Digital efficiency, he said, does not eliminate the need for trust built through personal relationships.

How Much Are Banks Spending on Technology

Technology investment figures underscored the scale of the transformation. Orlopp said Commerzbank spends roughly 500 million euros annually on modernization, digitization, AI and regulatory compliance. McKay said RBC’s total technology spending reaches about $6 billion per year, with roughly $2 billion devoted to initiatives including application development and modernization.

Cybersecurity alone accounts for hundreds of millions annually, reflecting rising third-party and supply-chain risks when banks integrate FinTech partners into their systems.

Regulation as Enabler, Not Obstacle

From the regulatory perspective, Sheikh Bandar emphasized that central banks must remain guardians of stability while adapting to technological change. He warned that if regulators fail to keep pace, structural gaps emerge that allow risks to migrate outside oversight.

Qatar Central Bank, he said, has taken an enabling role by investing in payment infrastructure, launching instant payments and issuing AI governance guidelines to protect data, manage cyber risk and support innovation. Regulatory sandboxes and direct FinTech access to central bank systems were cited as tools to balance safety and growth.

AI, Resilience and a Level Playing Field

Operational resilience emerged as a central concern. Sheikh Bandar argued that resilience should be treated as a core risk alongside capital and liquidity, with banks expected to recover from disruptions in minutes, not hours.

The panel agreed that artificial intelligence is already transforming operations through productivity gains, fraud detection and compliance. Whether it ultimately makes banking safer remains an open question. What is clear is that AI is reshaping how banks, FinTechs and regulators interact and that a level playing field will depend on shared standards and on trust.