The financial industry has a long track record in implementing robotic systems and artificial intelligence (AI), even if they might not have called it “robotics and artificial intelligence” at that time: enhancing customer service using ATMs, optimising internal processes with money counting devices, leveraging advantages of smart trading algorithms in high-frequency trading or minimizing the risk in financial investment vehicles in structured products.
Integrating these smart systems usually came with the benefit of saving money by reducing the cost of labour or optimising cash flows. With the growing amount of data generated and collected through the computerisation of our everyday lives – including the banking and investment sectors – a new opportunity arises: using aggregated information and machine learning to gain better knowledge of your customers and therefore serve them better.
Traditional meets state-of-the-art
Investments in fintech have noticeably increased over the last few years and fintech start-ups are on the rise globally. From lending to insurance to blockchain and chatbots, traditional business models meet state-of-the-art technologies, converging into peer-to-peer lending platforms, online-only insurers or money transfer services with competitive fee models.
At Kickstart Accelerator, we saw several providers in these fields in last year’s cohort: Zurich-based start-up Veezoo uses AI to answer questions about a company’s complex data, creating easily understandable visualisations. Notakey, a Latvian start-up, provides a smartphone-based solution to prevent identity theft, financial loss and breaches of privacy. Then again, Surong360, our first participant from China, works on a peer-to-peer lending platform (in China) which allows students to borrow money from alumni. Besides powering these “new kids on the block”, smart systems are also changing established business functions like customer service. Instead of exchanging emails with a customer service representative you might actually be interacting with a chatbot now, having access to your account details and being trained with millions of emails exchanged with thousands of customers over recent years.
Recently, robotic technologies have developed to a point where they can act as a virtual employee: They’re not only capable of processing tasks that follow certain principles and rules, but also of interacting with other systems and interfaces – actually just as humans do. Studies have shown that financial corporations could cut their costs to a large extent by using intelligent systems.
Moreover, they can profit from robots actually working faster and more accurately than people doing the same tasks. Well-trained algorithms extract relevant information from large sets of data efficiently, automating tedious tasks that were usually error-prone when done by humans.
Are finance jobs at risk?
There is also the other side of the coin: finance employees fearing for their jobs because they might be replaced by a robot. According to an Oxford study from 2013 – the finance industry is probably one of the industries with the most jobs at risk due to automation. The reason being the degree to which the finance industry is based on processing information. Still, opinions on whether or not many finance jobs will disappear, differ a lot. Accounting experts from Deloitte, for example, state the contrary: Their research says that technology actually creates jobs by allowing people to focus on more high-value tasks – and this enables a company to grow. Smart systems support their users in interpreting the data harvested, aggregating and visualizing it accurately to the needs of the actual use case and therefore giving better insights and hopefully leading to better decisions by the humans using it.
Finance sector going through changes
Either way despite the high potential of robotics in finance, most of the financial industry is still reluctant to implement this new technology. One potential reason for this is that until recently the technology was not feasible and not reliable enough. However, looking at the latest developments concerning the fintech start-up market, it is likely that this will change soon enough.
Therefore, financial companies will increasingly go through changes and take advantage of these trends. They’ll be more encouraged to adapt to the new technologies and significantly increase their use. However, remodelling the tradition of a company is often time- and money-consuming. That`s why for most financial companies and departments it`s best to start on smaller scale. They should investigate the areas of work that are the most rules-driven and monotonous. Those tasks may be the most suitable to be replaced by automatic and intelligent systems.
It has been interesting to observe corporations going through the rethinking process of their current technologies and asking themselves: What are the possibilities for improvements and changes that will make the most impact for our future customers? How could our existing systems profit from automation? From there on, it`s a matter of going step by step and having a well thought out strategy, but it is also worth considering investing in and or partnering with some of the more innovative start-ups in the market.