CBA Partners with Global AI Leader H20.ai, Share Price Up (ASX:CBA)

The Commonwealth Bank of Australia [ASX:CBAis set to boost its AI capabilities by taking a minority stake in H20.ai.

CBA will work with H20.ai to generate better customer and community outcomes by leveraging the power of artificial intelligence.

H20.ai is a cloud-based machine learning platform.

ASX CBA - CBA Share Price ChartSource: Tradingview.com

Over the course of 12 months, CBA share price has gained 55%.

CBA continues to push the tech envelope

First it was buy now, pay later (BNPL).

Then it was the recent — and historic — foray into crypto.

And now, CBA is embarking on an adventure in AI.

Aiming to dispel the stereotype of a stodgy, conservative bank, CBA seems to see itself in a race to embrace the future first.

And with the rollout of its BNPL option StepPay, and now the first ever Australian major bank to offer crypto services, CommBank looks like it’s heading the race.

Today, the bank announced it’s taking a minority stake in H20.ai, a tech firm CBA described as a global leader in artificial intelligence.

As part of the partnership, CommBank will provide H2O.ai’s AI cloud platform to its entire organisation, including data scientists, data engineers, and business users.

Explaining the potential of the partnership, Commonwealth Bank CEO Matt Comyn said:

The partnership will further differentiate and extend our artificial intelligence capability to better anticipate customer needs and reimagine products and digital experiences to meet those needs.

This partnership will accelerate our ability to deliver a broader customer proposition through more personalized experiences, which delivers greater value for our customers.

But how exactly will the partnership reimagine digital experiences?

CBA’s chief data and analytics officer Dr Andrew McMullan had an answer:

H2O.ai will also help us to better predict bills and forecast cash flows for both retail and business customers so they can plan ahead.

Customers want to be in control, and through the combination of our award winning app, powered by artificial intelligence, we can deliver products and services in the moment to manage unexpected expenses or irregular incomes.

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CBA: too big to innovate?

When CBA first announced its own BNPL offering in March, Ryan Dinse, who heads Exponential Stock Investor and Small-Cap Momentum Alert, kindly offered me his view on what CBA’s foray meant for BNPL players.

His view was thought-provoking:

Although some see this as a threat to BNPL pioneers like Afterpay, in my experience, big institutions that try and copy innovation usually fail to make too much of a dent.

There are a few reasons for this…

The main two are they don’t have the skillset or internal culture for the constant innovation needed to make new models succeed. As my old soccer coach would say, “They’re looking for where the ball is, not where it will be.”

And secondly, they’re making too much money in the short term from the status quo to really embrace disruptive models.

Why am I raising Ryan’s interesting point now?

Well, as part of its partnership, CBA will gain a dedicated team of H20.ai machine learning engineers to work full-time on ‘developing new AI solutions within the bank.

Is this CBA’s way to foster an innovator’s culture? Can the bank import an innovative culture by transplanting a team from H20.ai to its offices?

I don’t know. But it’s interesting that this partnership suggests CBA is trying to heed the advice of Ryan’s old football coach — partnering with H20.ai to chase where the ball will be, not where it is.

Time will tell how successful the partnership becomes but I, for one, find CBA’s recent moves fascinating.

As I mentioned last week, in business, evolution and adaptation is key.

CommBank won’t remain a top bank if it does not detect and act on changes altering the financial landscape.

For more analysis, cutting-edge commentary, and thoughts at the frontline of the financial revolution, I highly recommend checking out New Money Investor.

It’s a research service run by our Editorial Director Greg Canavan and Editor Ryan Dinse.

Regards,

Kiryll Prakapenka,
For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here


Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


Money Morning Australia