I often use this headline: An AI Completed 360,000 Hours of Finance Work in Just Seconds in my presentations. The story is about JPMorgan who automated the checking of commercial contract wording. The AI machine they deployed was so effective at saving time that they could layoff 1,500 lawyers. Is that a good thing?
Equally, we could talk about UBS, who use AI to augment wealth management by sending all emails to machines. This means that if a HNW (High New Worth) individual asks to change their portfolio risk, the AI machines can do this in seconds compared to days of admin work for relationship managers (UBS even has a team dedicated to making this work across the bank).
I could add many more examples, but the illustrations above imply that all AI in banking is about improving customer delivery, reducing costs and increasing profitability.
Oh! Isn’t that why we would want to be artificially intelligent?
Of course, but it’s hard to be intelligent if you are dumb with data, as I’ve blogged often.
Nevertheless, AI has many compelling reasons to develop these into financial services if it delivers an enhanced customer, employee and financial return.
Take the examples given above and, in both cases, the idea is to release people in the company from manual drudgery – checking contract wording and administering client requests – to enhanced delivery – talking to customers and advising them better, whilst checking for any legal and financial opportunities for them.
The problem is that a lot the discussions of these technologies is that they are a threat. You will lose your jobs, they are taking over the world, we are moving to Cyberdyne Systems and the Terminators. A good illustration of this is what the then CEO of Deutsche Bank, John Cryan, said at a conference I attended a few years ago. Back in 2017, he was quoted as saying that, “in our banks, we have people behaving like robots doing mechanical things, tomorrow we’re going to have robots behaving like people.”
Wrong positioning John. We need to talk about the positives of AI, not the threats. It is all about how you talk about it. Do you emphasize the positives or the negatives or, probably ideally, the balance of both.
In fact, the movie business is very good at showing us the threat to our future. The threat is all about how technology will destroy our lives. But it never has. Most tech has enhanced our lives. Instead of thinking Terminators think of R2D2 ... you get the idea.
In fact, what is interesting is that progress is driven by competition. The early adopters of all technologies are incentivised by cut-throat competition to look beyond the status quo. It is the nature of business. That is why AI is proving most successful in investment markets and, specifically, with hedge funds and the market makers.
In fact,early forms of machine learning were the neural networking systems of the early 2000s. Then index funds run by black box algorithms became the thing of the late 2000s. Algorithmic trading led to flash trading and proximity servers. These markets have always been at the cutting edge of technological progress, and AI is no exception.
So yesa, there are pros and cons. Too many us focus on the cons rather than the pros, however. This is clearly illustrated when we look back in time, as an excellent article by Rebekah Higgitt pointed out in The Guardian ten years ago:
Cities, print, the novel (especially the serialised novel), steam ships, trains, telephones, magazines and more have all been held to be worrisome and probably dangerous to the well-being and tranquility of the young and impressionable.
In The New York Times, Tom Standage writes about Social Networking in the 1600s:
Among the first to sound the alarm, in 1677, was Anthony Wood, an Oxford academic. “Why doth solid and serious learning decline, and few or none follow it now in the University?” he asked. “Answer: Because of Coffee Houses, where they spend all their time.”
I guess even the Greeks and Romans were frightened of progress. A controversial Greek philosopher, Diogenes, is a good example. One of the founders of cynicism, he defaced the currency of the time which, interestingly, had been run by his father, the mintmaster of Sinope.
Throughout human history, we have always been frightened of progress but, think about it. What would you do today without electricity, the internet or the mobile phone? Sure, life would be simple, but it would be harder in some ways and easier in others. All technologies improve life and, sometimes, makes it harder. For every technological improvement there will be someone, somewhere, trying to use it for underhanded purposes.
That’s just humanity.
After all, remember that technology is not sentient, intelligent or breathing. It only does what we invented it to do.
In summary, for all those who decry AI, I cry: AI is pour moi!
p.s. watching A.I. Artificial Intelligence again tonight. Recommended, except it makes me cry every time I watch it ...
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...