In my head, I often have an argument and, unsurprisingly, I had one today. Today’s argument is around how technology is used in finance and whether it’s a good or a bad thing. Therefore, in the spirit of a good Oxford debate, we have the proposer and opposer. The debate would go as follows (in my head).
I propose that technology is good for financial services. It has reduced costs immensely, improved services, allowed us to move to a much better model of business and dramatically changed the way we deal with money.
We can now deal with money in real-time, all of the time. There are no barriers to access and no restrictions on the way we serve customers, as customers can serve themselves.
Technology is changing every aspect of our lives and our financial lives.
We are able to provide access to everyone, everywhere, all of the time, wherever they are. This is a huge improvement in service and has allowed us to reduce the massive overheads of physical distribution. Branches closing, the reduction in the use of cash machines, the elimination of humans in transactions, the end of the teller. These are all huge benefits in our cost-income ratio structure, and our ability to provide better returns to shareholders and investors.
Not just this, but technology is changing our world and our society. We cannot ignore it. The internet, cloud, mobile telephone, artificial intelligence, and the distributed structures created by these systems, are giving us all massive benefit. Everyone, everywhere can now access systems and services like never before. This is why the main street is changing. We no longer need retail stores or bank branches. We can deliver those to a smartphone 24*7. Therefore, the main street becomes a place of community, gathering people in cafes, bars and restaurants. This is a far better way to use our physical centres now that we have decentralised our digital centres.
A digital centre for banking, shopping and commerce makes so much more sense. Physical is for community, communing and discussions. Digital is for transactions, learning and searching.
The result is a transformational time for society where we have moved away from the high cost of engagement to the low cost of access. Omniaccess is the word of the day. We can access everything, everywhere, all of the time, anytime.
Therefore, I propose that digital technologies is the best thing that has ever happened to our world. It has and it is transforming our world. It is eliminating all of the high cost overheads of distribution and access. It is including everyone, everywhere.
We cannot argue against this movement and, for finance, the result is fantasmagorichal. Banks are saving billions through digital structures, from cloud-based services to staff and customers to using artificial intelligence to manage fraud and risk. We are saving billions.
To summarise, technology has benefited us all and, specifically, the financial system. That is why you must vote for technology is good for finance and good for society this evening.
And then the opposer was called, and their words were a little bit more sceptical.
I have watched technology develop over the last half century and it is clearly going too far. From the creation of the network to what we have today, it is making the world a far worse place. We can see this in social media with grooming and paedophilia to everything that happens in our financial world from phishing to online romance and other scams and not forgetting APP, the authorised push payments challenge, and the wild west of cryptocurrencies.
And now we have this thing called artificial intelligence which is making things even more uncertain. Without strong regulations, these things are destroying our world.
Just look at the large technology firms, who get away with whatever they want to get away with and the governments, banks and businesses just have to tag along. In fact, we now have so much concentration of power in the hands of the few that the many are just stuck, watching in awe.
The question we should be really asking is: where is technology taking us and what is it doing for us?
Technology is a massive overhead in banking and, although it has made some things simpler, it has made a lot of other things far more complicated. Just look at a comparison of making a simple cheque or cash payment, to what we have to go through today with PINs, OTPs and two-factor authentication. Sure, you can do all your banking at home but what’s happened to the service that goes with this? There are no branches to visit, and call centres always say they are so busy that your call is 28th in the queue and you have to wait an hour to get hold of a human.
The system is broken.
In fact, a lot of technology has been implemented to cut our costs and get customers to do more for themselves at their cost. This has benefited the bank, in terms of cost reduction, but it has done little to improve relationships or relationship management.
It has also done little for employee loyalty and relationships. Most of our people hate the introduction of any new technology, as it replaces their jobs and years of good service.
All in all, the biggest issue with technology in finance is that we keep buying and playing with the next, new, shiny thing and we rarely think of the consequences. How does this help the business grow? How does it improve our relationships, rather than replacing them? Will this technology actually deliver because, too often, it does not. I have been involved in so many projects that over-promised and under-delivered; that arrived over-budget and years later than expected; that failed to meet the briefing and failed to deliver the benefits.
In summary, the promise and expectation of technology in finance is often far higher than anything it can provide and, in the meantime, it is destroying humanity and human relationships by automating them through devices and screens. If I could have my way, I would chuck the whole lot out and go back to the good old days of passbooks and ledger systems using quill pens and paper.
I rest my case.
TBH, I can see merits in both sides of the argument except the idea of the latter – to throw out all of the technology implemented today and return to the days of yore – is just ridiculous. The genie is out of the bottle, cats out of the bag, and technology is here forever and changing every day. Therefore, in my internal debating system, I always end up voting for this house believes technology in finance is a good thing. It just needs to be managed and regulated properly.
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...