I recently hosted a meeting of C-suite bankers to talk about Artificial Intelligence (AI) in banking. It was a great discussion and my summary would be: it’s scary and exciting. As I blogged about the other day, AI may be our future or our doom. Which way do we look?
The meeting had a theme as it developed which is that AI will augment the human and automate the mundane. I liked this them. In other words, the future will see a world where humans do what humans do well: relate. Humans will relate to each other through AI. What humans will do is talk, empathise and provide compassion, understanding and relate. This was a big theme of the dialogue.
There were concerns however and the number one concern seemed to be around how to regulate the application of AI. If AI is unregulated, it could become all-encompassing before we know it. AI will need to be regulated and, similar to the developments of gene editing, we need to consider how these technologies are applied before they are applied. That raised a question around whether governments are ahead of the curve or behind the 8-ball? Do governments actually know how to regulate AI? They need to.
In particular, we need to regulate the ethics of AI. The fact that there are so many things emerging that look real but are virtual requires regulation. When you see deep fake videos and machines that create what look like humans but are actually machines, we need to regulate this. This is already a huge issue in finance where people are duped into fraud through fake people online. It will get ten times worse in the next few years. Specifically, there is a concern that criminality with AI will run out of the gate before we even know the horse has bolted. There has to be oversight here. The question is what oversight and how, with a technology that does not comply with regulations.
Another question was raised as to whether AI would give you the right answers? For example, what happens if you ask a machine to give an answer, and the answer is not the right answer? What happens when governments censor the AI answers? Is the AI machine acting independently or under the control of corporations or governments? These are big questions for the future.
When we started discussing AI in the context of financial services, it became more specific to particular areas, such as how can AI manage client onboarding, AML, KYC and relationships. These are the most difficult areas in financial services, and could AI be the dream token to solve them? The answer … no.
The participants all felt that AI is there to assist, but not replace people, which goes back to the opening comment. AI is there to augment the human and automate the mundane.
For example, how will machines learn if there is no-one there to teach them? If you have not been involved in the world of finance and technology, how can you teach machines about the world of finance and technology? We underestimate the ability of machines if we think they can just replace people. People have experience and that experience is what we need to teach the machines. Machines can only learn if someone is there to teach them.
An interesting discussion then took place around humans becoming teachers of machines and, like any student, a machine sometimes goes wrong or off-peak. That’s why we need humans to be the future trainers and sustainers of machines. That’s our future jobs.
But then, more than this, you need to remember that a relationship manager cannot perform that role without experience. You need to know your job. How can a machine learn the role of relationship management if they’ve never had a relationship? If you lose the learning around relationship management, what replaces that experience and knowledge?
Specifically, in financial markets where we talk about AML (Anti-Money Laundering), KYC (Know Your Client) and relationship management, AI will eradicate the mundane checks of identity and verification and augment the knowledge about the person you are dealing with or servicing. In particular, it was felt that AI will make a massive difference to compliance and regulations. If you can monitor everything in real-time all-of-the-time, then the overheads of rules and regulations are simplified and automated.
The automation of regulation was a major part of the dialogue and brings us back to the core theme that AI will automate the mundane and augment the human.
Equally, AI will automate things like contracts and contract wording, administrative areas such as processing an email, and adding information to client profiles and contacts so that the relationship manager has a total customer view.
This last point is something I’ve campaigned around and about for years: can we create a 360-degree customer view? Can AI do this? Of course, it can, but will the organisation allow it and, if it does, what does that mean to the organisation?
One of the key things here is how to use artificial intelligence to harness data in 360-degree view for predictive analytics. How can we use data to create better relationships? Can we do this in a way that makes clients feel better or is such intimate knowledge of the client possibly going to make things scarier? The use of data, AI and predictive analytics offers massive opportunities but, as mentioned in the opening, it could make life scarier. It’s exciting but challenging.
AI will cut through organisational boundaries and create a world where information and data is at the heart of everything we do. In some ways, that is scary – what happens if the data doesn’t work? What happens if the system breaks down? What do we do if the electricity fails? These are the scary questions but, at the same time, it’s very exciting. If companies know everything they to know about me, how can they make my life better? If my doctor knows everything about my lifestyle, how can they diagnose me before I get ill? If my bank can see all of my data inflows and outflows, how can they advise me better regarding my life today and tomorrow?
In fact, as our conversation continued, it got interesting because we then started discussing life, the future and the world, as you do. We started discussing how AI could work with Environmental, Social and Governance areas (ESG).
This topic proved enlightening as there is hope and opportunity. The hope is that data analytics translated into AI results will deliver more knowledge, understanding and real-time actions around how activity results in outcomes. We can use AI to make our lives better. There is a huge opportunity here to use data to make the world better.
A good example is connecting the fields of farmers to the world of finance. If we can monitor fields to see how crops are developing in real-time, then we can insue those crops against failure in real-time and, equally, invest in wheat or barley success this year in real-time. That was an interesting dialogue.
Our conclusion was that AI is actually an exciting space, and the best is yet to come. There was optimism. There was clearly a strong view that we will not replace humans with machines, and that relationships are important. People want to deal with people. Of course, today, the machine might appear to be a person, but the view is that people will always want to deal with people.
This means that you cannot remove or replace relationship managers in finance.
In fact, you want humans to control technology, not to be replaced by it. As we look back in time, for example, who would have thought that radio, television, laptops and mobile telephones would have made our lives the way we live today? Each of these developments had concerns. There was even a movement of teachers to strike against the introduction of calculators in schools.
Going way back in time, think of the Luddites. A Luddite is defined as a person opposed to new technologies and new technology developments. Yet almost all technology developments have made our lives better, easier and simpler. Why would we oppose this? Once again, we came back to that theme of technology is there to automate the mundane and augment the human.
At the end of the discussion, we felt the world will be a better place thanks to AI. Yes, there are huge challenges around how to regulate the technology and what it will mean to traditional jobs, but it is developing to make the human world a better place. We will harness AI to improve our lives, not to replace our lives. As with every technology of the past, it is here to help us to progress. Don’t be a Luddite.
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...