Author and strategic advisor Brett King (“Augmented: Life in the Smart Lane”) provided an assessment of current and future technological innovation in the banking industry at the 2017 AFT Spring Meeting in Amelia Island, Fla.
“Sometimes being in the U.S. market we don’t really get the same perspective of the rate of change occurring from a global perspective,” King said. “We are already seeing some interesting changes happening.”
The U.S. is one of the most branched economies in the world, but branches don’t create financial inclusion. “This is where technology has a role to play,” King said.
Financial technology evolved from mainframes to self-service to today where “we’re entering a new era of technology disruption in banking, which is the experience era.” That is changing the delivery of banking services significantly to when and where customers need them.
Technology will absolutly redefine the way people bank. The biggest disruption is coming, with the advent of artificial intelligence and machine learning.
Artificial general intelligence, or AGI, is the intelligence of a machine that could successfully perform any intellectual task that a human being can. Another form of AI is super intelligence where a machine surpasses human brains in general intelligence.
“Closely related to this are embedded technology experiences. This where we have technology infused in our world” explained King.
King shed light on the historical and imminent influence first principle design philosophy has on the financial services space. First principle is a method of analysis that uncompromisingly pursues the fundamentals of a problem.
In banking, he pointed out, “we never use first principle, it’s always iteration,” which is a design practice based on a cyclical method of prototyping, testing, analyzing, and refining a product or process. An example is how financial institutions took banking statements and put them first online and then squeezed them to fit a mobile format. “This is design by analogy, this is derivative.”
The problem with iteration is that it leaves organizations open to first principle competitors. This is not the way to get massive improvement in scale or technology efficiencies or embed banking in peoples’ lives in different ways.
“The reason we don’t go to the branch today is because of the mobile device. You don’t need to go to the branch today,” King stated,
There is a simple way to determine if banking if ready for this experiential shift. “That is can they deliver every product they have in their wheelhouse, without a signature, in real-time, on a mobile phone? If you can’t do that today as a bank you are not ready for this future, and you may never be.”
King suggested the fastest way for financial services to get ahead of fintech competitors is not to transform the existing bank but to a have a technology-first approach.
The first principle of design philosophy in banking is all about pushing banking and embedding it into customers’ life on a day to day experience basis. King said, “It’s the experience that matters and its technology that delivers the experience.”