The Financial Express
Banking will be required, but banks may not be" is a common note that one hears at relevant forums and debates. If disruptions, substitutions and disintermediations are making banks irrelevant, what about bankers? With the rise of bots and artificial intelligence, coupled with fintech and multiform robotics, the question that assumes importance is: "Whither the banker?"
There is nothing new in bankers getting replaced by machines. In fact, way back in 1930, famous economist John Maynard Keynes coined the term "technological unemployment". In 1960, Eliza, a computer program, was deployed to replace manual work. In banking, the process started more than three decades ago.
To understand the phenomenon better, let us visualise a bank three decades ago, with huge ledgers, stacks of stationery and stamps, liveried messengers, and stern-looking managers. This revered group did almost everything: deposit taking, loaning, pawning, mortgage, bit of merchant banking and, of course, remittance and housekeeping including reconciliation. Fast forward 30 years. Today, in State Bank of India (SBI) for example, more than 80% of the transactions are done in non-branch journeys, i.e. not touched by any SBI employee, only through machines! The situation must be more or less similar at other banks. So, are the jobs of bankers are at stake? Here I must add that a Forrester research showed that, in 2014-15, more than 9.1 million jobs in the US got replaced or transformed due to technology.
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In India, in the early 1980s, leading banks, including SBI, set up their data processing cells for reconciliation and a bit of Management Information System (MIS). Essentially, back-office bankers engaged in routine repetitive tasks were replaced substantially by machines. The next replacement wave came with a major disruption called the Automated Teller Machine (ATM). The result was scores of tellers and cashiers were replaced by machines, ridding drudgery both from customers and bankers. Cash deposit machines, cash recyclers, cheque deposit machines, self-service kiosks were enhancements of the success of ATMs.
Today, bot-led machine deployment in banks is on high steam in many countries. In China, the banker community platform of WeChat is being adopted by leading banks. In the US, Capital One and Amazon have announced Alexa, a multifunction robot doing most of banking jobs. The Bank of America is likely to work with Facebook Messenger for chatbots. Recently, social media in India went viral with a video showing a robot helping customers in locker operations. Similarly, things like a natural voice-simulated chatbox and video bots where animated video figurines do what a human banker can do have fuelled speculations whether bankers as a species are facing extinction.
Martin Ford, the author of the best-seller Rise of the Robots: Technology and the Threat of a Jobless Future, has summarised the phenomenon very well in his book.
Let us also examine some of the new interfaces and summarise what they do. Machines, especially bots, are deployed in three areas: (1) physical work such as parking, receptionists and locker operations; (2) customer service such as order taking, queue management, call centre operations etc and; (3) intellectual tasks such as product formulation, bespoke offers in selling, Internet of Things etc. All of them work extensively on artificial intelligence and machine learning. In other words, the robustness of learned machine behaviour, and collection of data and analytics from touchpoints which could be aggregated into a reliable Internet of Things are is key for machines to be as good as bankers.
Voice and body language algorithms, a combination of smart blending of unique biometric characteristics, language and semantics based on grammar, etymology and language intelligence are essential for good chat and video bots. The most quoted and used virtual assistants and chatbots are Siri (Apple iPhones and iPads), Microsoft Cortana (Windows) and OK Google (Android). Experience shows that the tasks performed by these virtual assistants have a success rate of 50-55%, and user experience is average or worse. The reliability indices are too low for deployment in banking. For example, if one says "Cortana! Buy me a pizza." Cortana could answer (1) "Which pizza do you want?" or (2) "which pitta do you want?" or (3) "I did not understand, please say again." This can go on and on, and research by both Gartner and Forrester prove that bots could make customers irritable, can do things completely unintended and, at times, put a bank to losses. Customers could manage a pitta for a pizza, but would loathe bots to mess with their money!
Despite these inconsistencies, however, deployment is picking up speed. Many first-level service requests and customer interactions are being handled by machines. Existing machines like networks, ATMs are being given artificial intelligence. SBI in its new digital platforms like SBI inTouch is widely using bots and artificial intelligence, like IBM's Watson, to perform a variety of jobs. Stylist designs, superior and differentiated user interfaces and experiences are driving adoption.
So, the jury is out. Bankers engaged in repetitive and back-office jobs shall be replaced by machines faster than expected. However, inconsistency of outcomes, lack of ecosystem and readiness of consumers shall delay large-scale replacement in the front office. Men and machines shall coexist in banks for some time, like they do in any modern walk of life. Nevertheless, banks and bankers should not relax. The speed and disruption, primarily led by innovators and tech companies, could come sooner than expected. They should relentlessly prepare by:
Building a habitat of both data and analytics;
Ramping up skills for building and refining machine learning and artificial intelligence;
Identifying key work processes to be transferred to robots; and
Doing proofs of concept extensively and of course re-engineering the culture of internal and external collaboration.
The game has begun.
The author, Mrutyunjay Mahapatra is deputy managing director & CIO, State Bank of India
This article was licensed through Dow Jones Direct.
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