In today’s technology-obsessed world - and make no mistake - we are obsessed, it has become a lot easier to look at any issue in society and think ‘I’m sure this can be improved using AI, machine learning or blockchain’.
It’s an exciting time to be alive. We’re all experiencing such an enormous shift in technology and because of these advancements - improving the world by using it.
In the midst of the fourth industrial revolution, many industries will feel the pressure to change, mostly for the better. One industry that is already feeling the impact of AI, blockchain and biometrics - commercial banking.
As we work intimately with many of the major global banks, we can see the inner-workings of these traditional corporations and their continuing efforts to modernise the legacy infrastructure that is currently keeping the banking industry stale.
On a global scale (and it should come as no surprise to hear us say this) small business banking is broken. There are many reasons as to why the current state of business banking is the way it is - no visibility on future financial needs and no ongoing dialogue between relationship managers and their clients.
The role of relationship managers are so incredibly important, and yet banks currently have little dialogue with customers either face to face or via digital channels. Many small businesses do not have a finance professional on their team. They may have an accountant help them keep their finances in order, and may get some face-to-face time with their bank relationship manager, but most likely, it is not enough. Augmented intelligence through these new technologies will increase the capabilities relationship managers currently have.
Around two thirds of SMEs want tools and guidance on running their business and planning for growth and development. Relationship managers want to help, however, they are under-resourced and cannot physically prioritise and meet with all of their clients.
If we go back to our original point, this is one challenge banks are looking to overcome by using data and AI through a digital assistant output.
Will robots (digital assistants/chatbots) replace bankers as advisors?
Digital assistants can come in many forms, through chatbots who can answer financial questions at the touch of a button, or through notifications that can send businesses timely and actionable insights on their future cash flow.
Today, relationship managers have to do a lot of manual work for their small business clients, and it is not wholly effective or the best use of either parties time.
Despite efforts to increase efficiency by automating every process and human interaction, robots will not replace bankers as advisors, at least, not yet. In the short-term, it will influence the type of service-recommendations small businesses receive from their banks.
Will digital assistants give ethical and practical advice?
Everyone loves to speculate what a dystopian world can look like if AI takes over - if AI becomes self-aware and outsmarts humans, what happens next, right?
If you take away the emotion usually associated with such claims and look at it logically, there is legitimacy behind these conversations and debates around the ethics of AI in finance and on a wider scale - society.
If it becomes self-aware of the power that they hold to make substantial economic change through the advice they give to (potentially) millions of clients, will they remain ethical? How long will it take for someone to figure out IF digital assistants are acting in bad faith? What if they cause a small business to fail, or worse, trigger a national economic downturn by giving out ill-advice? Who will be to blame - the non-sentient algorithms or the human behind it?
Putting aside the question of being ethical for a moment, practically digital assistants can be extremely useful for helping relationship managers to prioritise and understand where they need to put their immediate efforts into, instead of working through an abyss of clients, blindly.
Through chatbots, banks will be able to give out automated tips, nudges and actions to help ‘advise’ small businesses on their cash flow, and when the best time to apply for finance will be. It will give them the opportunity to give high-quality and personalised banking services to small businesses who want actionable, calculated advice.
What changes can we expect over the next three to five years?
Forward facing interfaces such as chatbots and digital assistants are a natural evolution of an industry going through a profound transformation. Jobs will not disappear but will be reshaped. People that work in the banking industry will need to rethink and adapt their roles.
In the same way that technology has changed journalism, printing and communication methods such as fax and email, the financial landscape will fundamentally change forever thanks to technology.
The banking system we know today will be a distant memory in the coming years. The technology used will greatly benefit banking and a very underserved sector of the banking industry - small businesses.