Banking on AI as the Future of the Banking Industry

We are on the cusp of Artificial Intelligence (AI) becoming the norm, thanks to the falling cost of computing power, the availability of huge volumes of data, and, of course, improved algorithms. AI is transitioning from something that makes our lives more convenient (from Alexa to Siri, Uber, and Netflix) to a force that will overhaul our work processes in irreversible ways. Over the next few years, the commercial world will be transformed by the new machines down to the smallest detail, and the banking industry is no exception. Our recent research confirms that 58% of industry executives surveyed believe that AI will have a game-changing impact on their work by 2020. In short, the future of work in the banking industry is the mirror image of the future of AI.

In preparation for this massive shake-up, we are already seeing banks experimenting with chatbots and robotic advisory services in the areas of fraud detection and trading, among others. For example, India’s ICICI Bank is using natural language processing for sentiment mapping; SEB, one of Sweden’s largest banks, has introduced Amelia, a digital employee that can handle internal IT support; and digibank by DBS has integrated an AI platform into its mobile app to streamline the efficiency of customer conversations. Meanwhile, Active.ai, a Singapore-based fintech startup, is in talks with 20+ banks in the Asia Pacific region to deploy its Chatbot platform and expects at least 10 of these to roll it out live on their platform this year.

However, AI’s potential goes way beyond answering simple customer queries like “why was I charged a fee?” The time has come to move beyond experiments and take a long hard look at AI and what it means to your business. Process by process, throughout your entire value chain, you should pinpoint how AI can be applied to revolutionize how you perform your work. In short, AI is set to radically refashion banks’ operating models, making a deep-seated impact on business. There are three areas on which banks can focus to unlock AI’s true potential:

AI-led automation will enable massive savings. At present, banking executives are mainly focused on the front office, where customer interactions take place or products and services are offered. Such a narrow view, however, leads them to running the risk of missing something significant: the hidden treasure of their back office. Our research shows that banks are yet to unlock the true value of what lies in those spaces. AI has as much to do with securing tremendous savings in back-office operations and improving processes as it does with defining the face of the company.

AI-led automation will accelerate the pace of modernization in both middle- and back-office operations, thereby truly digitizing the fundamental operational blocks. With banks looking to reduce human error and get away from the complexity of legacy technology and operations, AI is the ideal candidate. For instance, Blue Prism is applying bots to risk, fraud, claims processing, and loan management in banking, saving millions. In another interesting example, ANZ Bank is leveraging AI for back-office automation to reduce time-to-market for the approval of unsecured and personal loans. According to their CTO, 1000 hours of back office activity have been eliminated due to the increased automation. Institutions’ resources can now be directed to tasks that add greater value to the business. In fact, automation will dictate firms’ subsequent AI initiatives. Our latest book, What to Do When Machines Do Everything, offers guidance on how leaders should pick their automation targets across their organization.

Big data is essential for viable AI systems. Looking after an AI machine is like keeping a hungry monster fed; incredible volumes of data are needed to provide the necessary capacity for learning algorithms so the machine can make strategic decisions (where to open a branch office or whether to approve a loan). Don’t jump the AI gun until you have addressed your data volumes and any quality issues. Banks will have to start tapping into their data for machine learning to improve business operations and build consumer-facing applications. Many banks are stuck in a paradox of an overload of data into which they have little insight; this is where big data steps up as an enabler for AI. This blend of the two should be hailed as a revolutionary paradigm for businesses.

AI is set to transform cyber security. The recent ransomware attack, WannaCry, demonstrated that cyber security threats have already become more than organizations have the capacity to handle. When it comes to security, too many organizations seem to adopt a reactive, rather than proactive, approach. It is estimated that cyber-attacks will cost businesses as much as US$400 billion per annum by 2021. To put things in perspective, that’s more than the GDP of roughly 160 of the 196 countries in the world.

Compounding the problem is the fact that our current computational infrastructure is woefully inadequate. What we need is a software infrastructure that can be mathematically proven to ensure a superlative level of security and has the ability to identify suspicious patterns before they can do any damage (however, we need to remember that there is no such thing as 100% security). AI and big data will complement each other and become the new face of consumer trust for organizations. In the same way that smartphones have become an extension of our persona, intelligent machines will grow from this new ethos of cyber security.

The early bird catches the worm, so make sure you move fast to reap all the rewards of this exciting AI age.

Photo Credit: frankieleon


Digitally Place the "Human" Back in Human Resources

“Employees are our greatest asset” – how many of us in our careers have heard this proclamation from on-high, and collectively rolled our eyes?

In the real world, the phrase often clashes with the realities of midyear and annual performance reviews, or managers agonizing over increments of bonus and pay raises.

And what about the times when a star recruit – the “big fish” you’ve cultivated for months – gets away because of a hitch in the applicant tracking process, which resulted in their taking the competing job offer from your rival? Or they showed up on their first day of work “ready to rock,” only to be asked by the front desk – “Who are you? And what are you doing here?”

Our new research from the Cognizant Center for the Future of Work entitled “The Work Ahead: Soaring Out of the Process Silo” highlights data-based insights and tactical advice on applying new digital technologies to front-, middle- and back-office work processes to realize new levels of business performance.

We analyzed the responses from the HR leaders in our dataset on how they think digital will transform work between now and 2020.

What’s clear is that senior HR executives believe the future workforce will need to use digital technologies to work faster, and that their required skills will change, likely due to having to collaborate with smart machines.

Surprisingly, HR executives were 40% more likely than any other group of operational executives to say that digital will significantly result in a need for fewer people (this, coming from HR, after all!). And they show tepid belief that digital will result in interpersonal relationships becoming more valuable.

One thing is for certain: The one function with an explicit charter to “help people feel like people” is HR. Yet often, HR makes for the most de-humanizing business experiences imaginable. Instead of “Welcome to the future of work,” it can too often be, “Welcome to the portal – your password was denied.”

In a future of work that will feature more automation, people – and their unique skills and talents – will continue to make the greatest contribution toward accomplishing the mission of all businesses. In the words of Professor Leslie Willcocks of the London School of Economics, automation and AI will finally let us “take the robot out of the human.”

Imagine an insurance company that sees immediate opportunity for expansion in Asia, and through digital recruiting (using a platform like ZipRecruiter), accelerates fivefold the process of getting sales “feet on the street.” Or, consider a firm like BetterWorks, which encourages companies to drive objectives and key results (OKRs). According to BetterWorks, companies that use OKRs are four times more likely to score in the top 25% of business outcomes.

Here’s an action plan for how HR can get humming with humans.

TODAY: Change the mindset – it’s about your people, stupid.

Take a good hard look at all HR processes. Are they really helping make things better for people? Look at your annual performance reviews. What about bonus cycles? Are they aligned for up-to-the-moment expectations and results in often fluid, digitally-driven business cycles? Don’t overthink it; focus on two to three HR processes that are broken or that prevent optimal utilization of skills that will help your best people thrive in the digital future of work. Use OKRs, especially in an era when “managers are from Mars”. Objectives are all about where-do-we-want-to-go (i.e., “Put a man on the moon by the end of the decade”); key results are about how-we-will-get-there (i.e., “Build a lunar module weighing under 40,000 pounds by December 1965”).

TOMORROW: ort out the balance of the “art of the job” (for humans) vs. the “science of the job” (for bots)?

Judgment is very easy for humans but very hard for computers. How can you (or the operational staff that reports to you) double-down on the unique skills of your current and future employees in a digital world? Robots are very good at the “science” of a job, especially when reliance on computational capabilities, analysis and pattern recognition poses questions on the most appropriate action to take next, based on all data available. Humans are very good at assessing situations, or the “art” of the job, and essentially asking, “What is the right thing to do in a given situation?”

ONE to TWO YEARS: Develop a new master architecture to support “work.”

The striking growth of subcontracting for digital functions and processes demands a flexible, distributed workforce and a work platform that can issue digital “gigs” into the labor market as demand dictates. The work platform will need to start aligning the orchestration of human and machine tasks, particularly as automation technologies and analytic processes dramatically enhance productivity and innovation through knowledge work. From an HR executive’s perspective, that not only means less paperwork; it also means far better outcomes, such as the precision development of people, mitigation of biases, improved help for legal matters, and substantially improved employee engagement to be better humans in the digital world that is swiftly approaching.

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Asia-Pacific Leaders Must Prepare for the Future Shock

Although the digital revolution has been around for over 70 years, in very real terms it’s only just getting going now. Artificial intelligence, automation, algorithms, and big data are subtly altering every facet of our commercial and personal lives. However, there is a dark side to this revolutionary digital shift: a widening gap in ideology between traditional business leaders and the future workforce.

Leaders’ Fear of the Erosion of ‘Work’ Meaning

Automation is an all-pervading phenomenon that is reshaping the face of every industry and raising perhaps uncomfortable questions about the work done by people and the future relationship between man and machine. Business leaders have a bleaker and more dystopian outlook on the impact of the new technology than any other group. There is a growing fear that automation will negatively affect their work, cut them off from human contact, and erode their individuality. In fact, only 35% of recently surveyed Asia-Pacific executives believe that they will be making a more meaningful contribution to their work by 2020, compared with a global average of 75%. When it comes to the positive impact of digital technologies on their job commitment and engagement, and opportunities for advancement, their confidence is at rock bottom. They glumly feel that intra-colleague empathy and support will fade away and individuals will become more and more isolated.

According to this dismal prediction, people will have less motivation to study, go to school, and pursue a career; their range of emotions will be impaired and they will shun collaboration. Although this attitude is depressing, it does raise some key questions: Where will the age of accelerated automation lead us? How will humanity’s role be defined in the future?

The Stars of Tomorrow are Embracing the Digital Boom

The stark reality is that the attitudes of the new wave of MBA students are worlds away from those of the executives. They are excited about digital mediums being a constructive adjunct to their work, bringing colleagues closer together, and boosting enthusiasm for the work by 2020. In fact, MBAs in Asia-Pacific are twice as sure (70%) that digital will help them to more productively collaborate with others. In short, they see digital as the engine that will drive the future of our society, jobs, and work.

Isolation is not an issue for them; they know they can’t win the digital game alone as digital is inherently collaborative and is all about creating a level playing field through the democratization of information. The ability to nurture a cooperative approach is a work skill that will shortly be in great demand, and today’s leaders must be ready to change the way they approach it.

One area where current executives and the workforce of tomorrow do seem to agree is work satisfaction. While both sides feel that this aspect will be improved by 2020, they think about it in very different ways, hinting at a workforce/employer disconnect in the future. For today’s leaders, work satisfaction is all about business growth, while future workers are reliant on the expansion of the digital domain.

Shun the Company of the Past

Present business leaders are missing a vital point in their thinking on digital — they must realize that it has as much to do with boosting the role of humans as it does with redefining the face of a company. A lot of these leaders will be mulling over two salient questions come 2020: 1.) Did they foresee the imminent change in workforce expectations and attitudes? 2.) What did they do to transform their workplace in preparation? A generation from now, we will look back and see how organizations transformed themselves, their people, and all of our lives. Currently, many bosses are convinced they can achieve collaboration in the new era by simply installing collaborative software, which is way off the mark. Collaboration is not about platforms or technology; it is about engaging people to join you in a mutual journey that can transform a business from the bottom up and break down internal silos.

To succeed in today’s world, companies need to have a tribe that is fearlessly devoted to the company’s digital mission. Companies that are genuine in their person-centric approach, putting customers and employees first, are not just surviving; they are thriving. Such a model entails a massive overhaul of the prevailing management culture, which remains hierarchical and authoritarian in many Asia-Pacific firms. When transforming a company, one must be ready to make sweeping changes to the organizational structure. Business leaders should emphasize empathy and humanity to relate to their would-be successors who embrace such a philosophy.