As South Africa emerges from what is proving to be one of the most stringent of lockdowns globally, advisers are faced with a number of challenges. Technology changes and a contracting economy add to this state of flux. At the heart of this evolving digital landscape in which brokers must operate lie big data and artificial intelligence or AI.
At its most basic, Artificial Intelligence can be defined as a computer system designed to think and act like a human or alternatively, computer based intelligence. Through its different components, machine learning (ability to self-manage knowledge gaps) and analyses of big data, AI should result in less emotional and more informed decision making. This is especially true in the financial services industry where AI is changing and decreasing the role of humans in the following areas:
| ● | Client engagement – through provision of chatbots in place of tele-support agents. Analysis of these questions and conversations aids product development and cross selling of financial products. Robo advice has the potential to manage client portfolios more efficiently and with less bias than human traders. More nuanced credit ratings via a multitude of big data sources including social media and mobile phone usage expand loan availability generating greater product access. |
| ● | Document management – forms can be automatically completed (without the input of administration staff) for clients and where appropriate, the contents can form part of data pools for analyses. |
| ● | Translation and speech recognition – client engagement can take place in one’s home tongue efficiently with less potential for misunderstandings and mistakes. Speech to text aids compliance and data analysis. |
| ● | Compliance – Anti-Money Laundering (AML) / Know your customer (KYC) Know your client Efficient risk management and analyses of individuals indicate potential political exposure. Regulation monitoring is also possible via the correct data sources. |
| ● | Market analysis offer greater efficiencies than human data analysts for new markets and products. The range of possibilities is vastly expanded through access to big data. |
The question is now asked, when and at what point do advisers hand over control to AI? From the above one can confidently hand over the more task / administration orientated side of the financial industry or business. AI is not, however, in a position to respond to the human side of business namely relationships, creativity and communication. Adding value and context to decision making is also not always possible via AI, bias notwithstanding.
The overall benefit of AI (i.e. will it enhance or be destructive towards the human condition?) will be measured, at a certain level, in how industries and markets respond to same. In the short term, job loss pain must be mitigated through various upskilling opportunities from within organisations and government policy initiatives (universal basic income perhaps?) further supported by an improved and expanded education system.
As for benefits to the financial sector, only time will tell. The impact of the hunger for big data driven AI is double edged. Whether consumers are happy or not to share all digital facets of their lives with financial institutions for access to improved products remains to be seen. The enactment of privacy laws across various jurisdictions is on the rise. This digital tension between state, individual and business remains contentious and in need of responsive yet responsible and ethical management – even more so as data related services increase. Advisers must, therefore, analyse their client bases, data sources and internal processes when considering and implementing responses to this new world.
Right now, they hold the relationship – that must count for something.
