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  • @fintechna 3:35 am on September 23, 2018 Permalink | Reply
    Tags: 000000, , , , , , frontiers, , , ,   

    New private banking frontiers: mobile apps, convenience & personalization 

    In the first blog in this series, we discussed how seeking to expand their presence in and wealth management should employ digital solutions to provide customers with the and they have come to expect from other companies with which they do business.

    are an essential part of such an integrated private banking strategy. Rather than an “add-on” feature, they should be a central element in providing exclusive services to people with premium needs. These services can range from personalized financial advice (delivered at the frequency the customer desires) to digital feeds of financial media tailored to customer needs.

    A first-class mobile app should be:

    Secure & private

    The app should have two-step authentication and may incorporate a biometric login such as voice, facial or thumbprint recognition, as well as data encryption and fraud protection.

    Innovative

    The app may connect the customer with the private bank via a chatbot or may enable voice-controlled, hands-free interaction. It may aggregate all the customer’s accounts with that institution or with other institutions.

    Robust

    It should provide the customer with a portfolio overview and interactive tools for portfolio analysis and personalization, using both human and -advisory capabilities. The app should support trading, brokerage and foreign exchange transactions as well.
    New private banking frontiers: mobile apps, convenience & personalization fintech

    Interactive

    Through the app, the customer should be able to interact with client services via live chat, through call-backs or through other apps such as WeChat or Whatsapp. The app should also enable direct contact with the financial advisor via direct messaging, direct dial or video conferencing.

    Personalized

    The app should notify the customer of product and service offerings, provide tailored market and economic research and offer educational content using interactive tools and gamification.

    Of course, the question now is not whether private banks should have a mobile app—but how to develop an attractive, value-added offering. Human interaction is still essential to private banking, but wealth managers using mobile apps in concert with other digital technologies will have more time and better insights with which to cultivate their customers.

     

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  • @fintechna 3:35 am on September 20, 2018 Permalink | Reply
    Tags: 000000, , , , crucial, , , , shifts,   

    Retail payments: 5 crucial market shifts 

    I always like to start from the beginning. So, let me begin my blog by introducing myself. I recently joined Accenture to lead our North America practice. After more than 30 years in financial services—much of it working with companies across the and commercial payments value chains—I am no stranger to change.

    But in today’s era of digital payments, it is not just velocity of change but the scale that brings with it both opportunity and peril. It is exhilarating, but can be overwhelming. My focus is helping payments players make sense of it all, so they can harness the potential of digital payments to drive their businesses forward.


    Retail payments is in the thick of digital disruption. That should be no surprise. Digital is reinventing daily life fast—how we watch, listen, talk, shop, travel, ride and connect. It is a powerful and profound force of change. One that is ubiquitous for everyone. The combination of consumer demand, evolving technologies and retail dynamics is creating a new future for retail payments with digital payments at the core.

    These are the five market to watch:

    1. Mobile jumps on the S-curve

      Remember when you joined Facebook or made your first online banking transaction? I bet you did it from a desktop computer. I also bet that today, you check social media and bank from your smartphone. This is the trajectory of digital adoption. All roads lead to mobile. While US consumers haven’t embraced mobile payments with the gusto we expected considering their smartphone obsession, a tipping point is near. Accenture research shows that 64 percent of North American consumers plan to use a mobile wallet in 2020—a 39 percent rise in the user base in three years.1

      This is a pivotal moment for payments players. Should they double down on the inevitability of mobile as THE consumer access point or move more deliberatively? History offers a cautionary tale. From Blockbuster and Napster to Borders and Polaroid, there’s a graveyard of companies that took a wait-and-see approach to digital disruption. Digital economies tend to scale toward natural monopolies with most markets consolidating into a handful of winners—Amazon owns nearly half of the US e-commerce market.2 I expect this consolidation to occur in mobile payments too. That’s why payments players should act now to create mobile payments experiences that capture consumer’s hearts—and wallets.

    2. The great vanishing act

      Consumers want payment transactions to disappear. Uber, Amazon and countless online subscription companies have shown that making a payment can be seamless and convenient. So much so that the payment becomes invisible. Consumer interest in frictionless payments is palpable driving recency, frequency and monetary value to digital payment savvy retailers. Consider that visits to US restaurants where payment is by mobile app jumped by more than 50 percent over the last year.3 I expect this interest across all retail categories to gain momentum fast.

      But the payments industry has work to do to meet consumers’ expectations. Today, the payment transaction is often the speed bump—actually, the rush-hour traffic jam—in the retail experience. Research reveals that consumers loathe complex checkouts. In fact, they will not stand for them. Eighty-seven percent of online shoppers abandon their carts due to complex checkout. And over half (55 percent) would not just leave their carts, they would never come back to that retailer’s site.4 The time has come for payments players to make invisible payments a visible priority.

    3. RIP, channels

      Traditionally, companies were built in a linear fashion with stores, call centers, online and mobile—a maze of departments, functional areas and channels. These silos reflect organizational structures and internal complexities, not consumer mindsets and behaviors. Put simply, channels are about companies, not consumers.

      When consumers interact with payments companies and merchants, they want to learn about a product, buy a product, or service a product. They want to do this on their own terms. And in the digital era, they have countless options to do so. For payments players to be truly customer-centric, they have to stop being product- and channel-centric. They must kill channels as we know them, driving integration and absorbing complexity to provide simple, streamlined experiences to consumers. Integration must be so seamless that channels stop existing. Rest in peace.

    4. Recognize. Remember. Recommend. Reward.

      The three Rs of education are reading, writing, and arithmetic. The four Rs of the customer-centric business model: recognize me regardless of my entry point and device, remember my history of interactions, recommend relevant products and services, and reward me for my loyalty. There’s been a wake-up call for payments providers in recent years related to these four Rs. The old days of focusing purely on payments transactions are no more. After all, the digital economy is an experience economy. More and more, the customer (and merchant) experience is becoming a critical differentiator in retail payments.

      As payments players develop customer experiences beyond the transaction—such as providing advisory or expense management services, offering a single view of account information, or curating real-time rewards and deals through partner networks—they should look to digital powerhouses that excel in customer experience. Amazon is a leader. The company recognizes and remembers consumers every time, recommends products they will love, and rewards them. The benefits are mutual. Amazon Prime members spend about $ 1,300 more each year than non-members.5

    5. Security&8217;s silver lining

      There is not a more serious or consequential issue for payments players than security. Without it, nothing else matters. A day does not seem to go by that there isn’t news of a breach. As cutting-edge as their technologies are, even digital-born companies like Facebook and Google are not immune.

      There is a silver lining in this storm for traditional financial institutions. Security is never absolute, and criminals are always getting better at being bad. Protecting data is central to the industry. It always has been. Compare this to the fact that digital competitors have built their business models on packaging and selling data, not on protecting it. The clarion call for payments players is to double down on security, to keep innovating to protect data while it is stored, and while it is in flight. Tokenization is the gold standard now. Expect biometrics and continued migration to multi-factor authentication to be the next wave.

    In future blogs, I will explore these market shifts in detail and how new players are taking advantage of them. In the meantime, I hope to see you at Money 20/20 where Accenture will share more insights on what’s next in digital payments.

     

    1 Accenture, “Driving the Future of Payments: 10 Mega Trends” 2017
    2 Ingrid Lunden, “Amazon’s Share of the US E-Commerce Market is now 49%, or 5% of all Retail Spend” 7/13/2018
    3 NPD Group, “In a Slow Market, US Restaurant Operators Step it Up by Offering Consumers Digitally-Enabled Convenience” 3/13/2018
    4 James Melton, “Getting the Online Checkout Process Wrong Can Be Costly, Research Shows” 8/13/2018
    5 Beth Braverman, “Amazon Prime Members Spend More on the Site— a Lot More” 7/7/2017

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  • @fintechna 3:35 am on July 25, 2018 Permalink | Reply
    Tags: 000000, , , , , , , imperative   

    The data imperative for credit cards 

    Over the past dozen years, numerous US regional have relaunched consumer card programs on a self-issued basis. At the outset, the growth component for many of these relaunch strategies relied heavily on branch channels, customer loyalty and the desire to consolidate banking relationships. In recent years, the banks’ credit card programs have been plateauing to low, single-digit growth rates without obvious incremental prospects for growth in accounts, spend and balances. Although credit card portfolio health and returns continue to be favorable, without the ability to demonstrate further stepwise growth potential, these programs are at risk of atrophy in key areas, such as attention from senior executives and ongoing investment in innovation.

    Often, the keys to reinvigorating growth include identifying and addressing root-cause growth inhibitors (which often relate to approval rates, credit line assignment and service experiences), and finding ways to digitize and integrate customers’ credit card experiences with those of their overall banking relationships. exhaust created by these card programs and other players in the payment value chain could hold a secret to vast amounts of information value to unlock growth opportunities.

    Card issuers and, in particular, the payments industry generally have been early adopters of data-driven insights to grow their business; and rightly so, since the industry generates a massive volume of data. Banks are increasingly recognizing and reaching the point at which they need to drive innovative applications of the insights in functions that traditionally do not leverage them fully or consistently—for example, for enhancing customer experience or devising new product strategies.

    In addition, as depicted in Figure 1, prospect and customer segmentation can be a key component of focusing growth strategy investments on areas of greatest opportunity. For instance, segmentation can help a bank determine areas for product refinement to both improve experiences for existing credit cardholders and tap into unserved or underserved markets. We also see segmentation as the prudent way for many banks to carefully venture outside of their existing retail banking customer bases through twinning analysis to identify characteristics their most profitable cardholder segments may share with non-relationship prospect pools.

    Figure 1. Actionable segmentation driving key customer/prospect insights
    The data imperative for credit cards fintech
    Source: Accenture research and analysis

    Card issuers see only one dimension of customers. However, there is significant information asymmetry with other players in the value chain, namely, payment networks, merchant acquirers and merchants. Issuers capture data about and cardholder details only, while merchant acquirers see details on merchants and transactions, merchants collect data on their customers and purchase basket, and the payment networks record data on movement of funds between these players and authorization tokens. Building a cross-payment cycle data view allows creation of rich micro-segments for hyper-personalization (Figure 2). It also enables banks to conduct merchant, store and product-level marketing studies, generate early warning indicators for fraud and delinquency, and create visibility into customer and industry trends.

    Figure 2. Types of data captured and analyzed across different parties involved during the payments process
    The data imperative for credit cards fintech
    Source: Accenture research and analysis

    Collection, cleaning and deciphering this data exhaust is an onerous task. However, advancements in artificial intelligence capabilities, like machine learning and Big Data, is making it easier and faster than ever before.

    Capabilities, such as Accenture’s Intelligent Enterprise Platform that sits on top of the Accenture Insights Platform allows banks to layer third-party data from social media, web browsing and geo-tagging over the payments data. This further deepens card issuers’ understanding by manifolds around customer needs and behavior. It’s opening previously unimagined use cases, like real-time mood-/persona-based recommendations, geo-tagging and location-based offers to customers.

    Looking forward, we anticipate that a cross-payment cycle data ecosystem together with machine learning will play a broader role in how banks generate new growth in accounts, spend and balances, as well as how they harvest value in their credit card programs.

    We invite you to read about data as the new ecosystem currency in our report, The New, New Normal: Exponential Growth

    Special thanks to Sanjay Ojha for his insights, as well as Rajat Mawkin and Uday Gupta, who also contributed to this blog. 

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  • @fintechna 3:35 am on May 5, 2018 Permalink | Reply
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    Banks: We need to talk 

    Forget mobile apps— to start talking to customers

    As part of our guest blog series, Accenture Nordic Banking Practice Lead Satu Pulkkinen explores how banks can take the next step in evolving customer relations. 

    First came online and mobile banks, with Nordic banks leading the way. The next wave of digital banking? The conversational bank that operates within messaging applications. that can see and hear us, continuously growing ecosystems around increasingly popular messaging applications, as well as the amazing progress of artificial intelligence (AI), are enabling personalized, fully digital banking assistants that you can to anytime, anyplace.

    Technology is an integral part of our daily lives. Increasingly, devices that used to simply respond to our commands and actions can now also hear and see us. We use mobile applications for almost everything, especially instant messaging. Since the beginning of 2015, WhatsApp, Facebook Messenger, Snapchat and WeChat have become the world&8217;s most used social media applications.

    Over 60 percent of customers prefer messaging applications over email or phone calls. And we are moving on from using several different mobile applications to services that are integrated within ecosystems of those applications.

    Towards digital assistants with human understanding

    The development of artificial intelligence (AI) technologies, like machine learning and deep learning, has progressed at such a pace that the chatbots many Nordic banks use today are already starting to look outdated. As AI technologies continue to mature, bots will become even more human-like.

    The increased volume of data and number of analytic tools create the possibility of offering individualized digital services on a mass scale. This has already led us as customers to expect each digital interaction to be as good as our best last experience—regardless of the brand or industry in question.

    The result is a bank that can talk

    Conversational banking exploits these technology trends in an intelligent way. Banking bots within messaging applications and virtual assistants (like Apple&;s Siri or Google Assistant) connect cost savings brought by the previous generation’s online and mobile banks, with the personal touch previously provided by bank clerks.

    Banks: We need to talk fintech
    Read the report

    What is behind all this progress? Talking is natural for people. Complex language and communication separate humans from other animal species. Stories form the cornerstones of civilizations. Talking is, therefore, genetically encoded in all of us.

    In much the same way, messaging applications are natural to current mobile devices. These applications are easy and funand effortless to use, even on the move. We can type or speak and we can hold one- or two-way, personal or group conversations.

    Therefore, brands have rushed to embrace messaging applications. For example, Facebook Messenger has over 33,000 bots offering customer assistance and counseling as well as providing interactive experiences. And we seem to like them: over 60 percent of consumers use messaging applications to communicate with brands.

    Paying the bills or looking for investment tips—all accessible from your couch just by using your voice

    For example, in the future, a bank bot could interact like this: &;Hi Satu! I noticed that there’s €100 left over in your bank account. Should we put it in a fund that matches your expected return by only investing in environmentally friendly companies?´´

    Capital One in the US is one of the first financial institutions to move into conversational banking. It offers its customers an opportunity to check their account balances or pay bills just by talking with Amazon&8217;s Alexa—and without once touching a device. The customer just has to link his or her bank account to an Echo device. Once that’s set up, the bank literally obeys the customer’s voice.

    Now it’s time for Nordic banks to move on from online and mobile banking and start talking to customers. Who will be the first?

    Banks: We need to talk fintechSatu Pulkkinen, Nordic Banking Practice lead at Accenture

    Banks: We need to talk fintechBanks: We need to talk fintech Banks: We need to talk fintech

     

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  • @fintechna 3:35 pm on March 13, 2018 Permalink | Reply
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    Q4 2017: U.S. credit card issuer snapshot 

    Although issuers are benefiting from increased spend and receivables, rising loss rates and rewards costs are continuing to suppress ROAs.

    Key themes

    • Receivables and spend increased year-over-year for all
    • American Express, Discover and Capital One led in terms of year-over-year receivables growth
    • Chase and Capital One led in terms of year-over-year purchase volume growth, although all issuers reported strong growth
    • Several banks have suggested that competitive intensity has moderated slightly
    • Although loss rates are normalizing, they remain below historical averages
    • Investments are being made in machine learning, mobile and advanced analytics

    Notable happenings

    Transactions:

    • PayPal announces an agreement to sell its $ 5.8 billion portfolio of U.S. consumer receivables to Synchrony

    Partnership Renewals:

    • Marriott signs renewal agreements with Chase and American Express

    New Partnerships:

    • Uber and Barclays introduce a new no-fee credit card
    • Alliance Data gains new partners IKEA and Adorama

    New Products/Features:

    • Hilton and American Express introduce a new high-end fee card, Aspire
    • Amazon opens its cashier-free store Amazon Go to the public
    • Chase introduces mobile payments as a bonus category on Freedom cards

    Mobile & Tech: 

    • Target introduces a proprietary wallet in its mobile app
    • Kroger and Chase Pay partner on mobile payments

    Industry trends (based on non-retail card issuers in scorecard section)

    Q4 2017: U.S. credit card issuer snapshot fintech
    Click to view larger

    1 Total receivables for non-retail issuers at end of 4Q17. 2 Total purchase volume of non-retail issuers in 4Q17. 3 After-Tax ROA excludes Wells Fargo, Chase, Bank of America and US Bank, which do not report credit specific income. 4 YoY = Year-over-year change versus 4Q16. 5 QoQ = Quarter-over-quarter change versus 3Q17. Note: PV is reported PV for the quarter (it is not annualized or TTM)

    scorecard—Q4 ($ in Billions)

    Q4 2017: U.S. credit card issuer snapshot fintech
    Click to view larger

    1 Chase no longer discloses an ROA measure directly attributable to Card Services. 2 Citi: Purchase volume includes cash advances. 3 Capital One: U.S. card business, small business, installment loans only. Purchase volume excludes cash advances. 4 Bank of America: Receivables, purchase volume and net loss rates are for U.S. consumer cards. ROA estimate is discontinued. 5 Discover: includes U.S. domestic receivables and purchase volumes only. Restated: ROA reflective of Direct Banking segment (credit card represents ~80% of loans) and implied U.S. Cards tax rate of ~40%. ROA denominator estimated from total loans ended totals. 6 American Express: Changed reporting method as of 1Q16. Figures are for U.S. Consumer segment only and exclude small business. 7 US Bank: Net Income attributable to Payments Services totaled $ 309M as of 4Q17, compared to $ 322M in 4Q16; Payments Services includes revenue from consumer credit cards, as well as commercial revenue and other sources. 8 A/R and PV for Retail Card unit only. 9 Loss rates and ROA include all of SYF’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for about 70% of total receivables. 10 Average Receivables.

     

    Q4 2017: U.S. credit card issuer snapshot fintech

      Paul Sammer, Management Consultant

    Q4 2017: U.S. credit card issuer snapshot fintechQ4 2017: U.S. credit card issuer snapshot fintech

     

     

     

     

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  • @fintechna 3:35 pm on November 16, 2017 Permalink | Reply
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    CISO importance is prompting internal role change 

    The value of the Chief Information Security officer has never been more evident, but is the well defined and structured enough?

    have witnessed a spate of cyber breaches recently with the financial sector experiencing 300 percent more cyberattacks than any other industry. More than 75 cyberattacks against financial services companies were reported in first nine months of 2016.

    A string of regulations requiring banks to adopt a more open architecture will further expose them to heightened cybersecurity risks, and the rapid pace of digitization in banking will only add to it.

    However, the banking industry is yet to see an increased responsibility in the role of a Chief Information Security officer (). A study by Gartner showed that only 20 percent of CISOs report to the CEO with ~60 percent of them reporting to the Chief Information Officer (CIO) or an IT executive. With the growing of security in an organisation, this current reporting structure might need to more to favour CISOs reporting directly to the CEO.

    Fig 1. Majority of CISOs report to the CIO
    CISO importance is prompting internal role change fintech
    Source: Gartner- Determining whether the CISO should report outside of IT

    CISOs need to have impartiality when it comes to budget and ability to influence the CEO

    There have been instances of uneven allocation of the IT budget for spend on cybersecurity, resulting in CISOs getting a smaller piece of the pie. Studies have shown that information security takes only a tiny three to five percent of the overall IT budget.

    UK banks have seen some traction here: Barclays has merged its two security functions, with previous Chief Security Officer (CSO) and CISO roles coming together under a combined CSO. Lloyds has set up a cybersecurity advisory panel to bring an industry perspective on key cyber-related activities and threats. The panel is part of a subcommittee to the Board Risk Committee (BRC) and the Chief Risk Officer regularly informs the BRC of the aggregate risk profile of the bank.

    Decouple the CISO from IT?

    Having the CISO report outside of the IT leadership could have several advantages:

    • Direct oversight from the CEO and business leadership could ensure key security considerations are addressed in business strategy and associated investments.
    • Reporting outside of the CIO puts the CISO and CIO on more equal footing.
    • It could help organisations attract more experienced security executives who might expect to report directly to the CEO, not a CIO.

    IDC believes that by 2018, increases in cybersecurity threats could result in 75 percent of CSOs and CISOs reporting to the CEO. Some regulators are even making it mandatory: In Israel, there are laws dictating that CISOs report directly to the CEO. UK banks should take a cue and become the financial services gold standard in cybersecurity governance.

    Banks need to reconsider the CISO role for greater cybersecurity effectiveness

    The primary goal of the CISO is not to protect but to protect the business. Though the position has risen in the organisational structure to the inner circles of the C-suite, a CISO’s ability to dictate a budget and make decisions independently may still depend on where the position falls in the organisational structure. Further, the role of cybersecurity experts has become increasingly important on the board, which has translated to higher salaries and attrition as well. Empowering CISOs might help mitigate this, through increasing representation on the board, direct reporting to the CEO, independent budget allocation and a role in strategy formulation.

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  • @fintechna 3:35 pm on September 29, 2017 Permalink | Reply
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    ARTIFICIAL INTELLIGENCE: AUGMENTING THE HUMAN WORKFORCE 

    These are exactly the sort of words that would make you launch your phone into the nearest river, if they had been uttered by Siri. Fortunately, they are the fictional words of HAL 9000, the sentient system in the 1968 Stanley Kubrick film, A Space Odyssey: 2001. It told the story of a mission to Jupiter and the gradual realisation of the crew that the perfect piece of AI designed to help them, was in fact fallible, and plotting against them to preserve its existence.

    We don’t appear to have come much further in our collective sentiment towards trusting AI. The term “killer robots” has been splashed across the press headlines quite a bit recently, with some heavyweight names behind them, highlighting the potential dangers of using AI in warfare. Some of these warnings around the ethical usage of AI are undoubtedly justified. How do you prevent AI from learning bad characteristics as well as good? It doesn’t necessarily need to be as dramatic as the use of AI in war. It could be as simple as AI learning some of the sadly still intrinsic bias in society, such as that boys wear blue and girls wear pink. The stock archive this technology is likely to learn from has been written by humans. And humans have prejudices, fears, and ideas that they want to promote. AI may not be able to help learning some of these, and apportioning blame to the technology would be a mistake, but they could still have an impact on the service provided to us.

    Ethical issues aside, nervousness around AI in the workplace is much closer to home, and again in many ways, there is justification for some jitters from employees. Technology has a history of replacing humans in the —and the initial stages of this can be painful. Printing presses, weaving machines, mechanised farming, automated production lines, to name a few that have disrupted the workforce across industries. AI in banking could undoubtedly do the same if deployed without a long-term, sustainable plan from .

    In our upcoming series of reports on AI in financial services, Accenture looks at the potential advantages and pitfalls of embracing AI in banking, capital markets and insurance.

    “People x Process x Data = AI” is our view on the success of AI in the workplace. The process and data side we will come back to another time—but an equally important part of AI are the “people” that this technology will work alongside. Many have years of experience, most of which will not be written down for an AI colleague to pick up and assimilate into its own bank of knowledge. The importance of people is particularly significant in banking, where interaction between the bank and customer is still of vital importance to most, and must become a priority. Fifty-three percent of customers still go into their branch once a month or more. Customers like and want the reassurance of being able to speak to a person.

    That is not to say that many would not be happy with a “phygital” blend of interaction with their bank. But if this is to be a success, then the workforce needs to be ready and able to use this technology. And with 30 percent of banking executives unsure that their current workforce has the necessary skills and experience to use AI technology to its optimum, there is cause for concern that the rollout of this technology could pose a problem for banks.

    For it to be a success, a fully detailed proof of concept should be in place, with an inventory of the workforce skillset being of primary importance, before any decisions are made on how and where to use AI. Easier said than done? It needn’t be. Some simple “best practice” steps should help this along. To name a few:

    • Involving the workforce in decision-making and investigations into how and where AI could help them in their roles would go a long way towards easing any transition of jobs
    • Providing training to understand what the technology involves, and showing its limitations as well as its advantages
    • Showing how AI could take away some of the more repetitive and frustrating parts of a function, leaving the employee to do the more interesting parts of their role, and take part in more creative and stimulating work
    • Introducing roles that will make use of AI to create value within the business, and which need some human imagination to create. The lack of differentiation in products has long been lamented by customers. Using AI to simulate how a new product might work for a bank, in a fail-fast, low-risk environment, has its obvious advantages

    Maybe the ethics of using AI is less around whether there is a risk it will learn our worst traits, and more around what our intentions are from using it. If it is just to slash the costs of the workforce, then employers are missing a trick, and could find themselves on the receiving end of public and regulatory disapproval. Their employees have something AI cannot learn: empathy and understanding of human nature. Both of which are vital in a customer-facing service, and which in its current format AI cannot provide on its own, meaning a combined AI/human workforce is necessary to get the best from this technology. The future is bright; the future is still human.

     

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