The Weekly Extract from Extractable is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.
This week we look at the acceleration of digital transformation and innovation spurred by the pandemic — and how to move forward. We also examine conversational AI, and the potential of a future where AI could eliminate nearly all friction for consumers.
Innovation in the Time of COVID
In an article in Forbes, Rishi Khanna, CEO of ENO8 and ISHIR, points out that COVID-19 has accelerated digital transformation and innovation due to the “Theory of Constraints.” As Khanna notes, “this theory states that every business or entity will have its own constraints and limitations, and once we know this, we can leverage it to our advantage.”
The pandemic has forced organizations to face their weaknesses and focus on improving them with great focus and speed. Organizations that have paid lip service to digital transformation and innovation have suddenly found that they must practice what they have preach.
Khanna suggests:
“Start by establishing a small task force in your business to look at the external factors at play here, review internal constraints and resources, keep an (eye) on the competition and survey the new opportunities that are now possible due to the pandemic.”
We found an article in Inc by Larry Robertson, Founder and President of Lighthouse Consulting, to be complimentary to Khanna’s suggestions. Robertson says that for companies “to thrive and…survive these difficult times”, they should “try adopting the ‘Five Cs’ mentality.”
Robertson describes the Five Cs, as
“five uniquely human qualities that together make up not only the best toolkit for weathering uncertainty, but also the arsenal needed to get beyond it and thrive: communication, cooperation, compromise, creativity, and compassion”.
Innovation comes from thinking differently. Leaders cannot just focus on the immediate issues. Robertson notes, “while those challenges cannot be ignored, only focusing on the mechanics of your business does little to move you beyond uncertainty. Your weariness from the past few months tells you it’s true.”
Let’s assume that you agree that right now is the time to get your innovation lab off the ground. You are applying a different way of thinking, including applying “The Five Cs.”
How do you move forward when the risk is greater, or others balk at following your lead — or you aren’t given the resources? This is the Innovator’s Paradox.
Jeff Dyer and Mike Hendron, from Brigham Young University, and Nathan Furr, from INSEAD, define strategies to break through the innovator’s paradox in an article in the MIT Sloan Management Review.
In the Extracts, we strive to bring our readers articles that are easily accessed. However, this piece is well worth the paywall — with strategies followed by innovators like Jeff Bezos, Elon Musk, and Marc Benioff. The authors call the strategies noted, “impression amplifiers.”
The authors quote Marc Benioff, Founder and co-CEO of Salesforce, who says: “My ability to generate innovations [for Salesforce] has basically built up over time.” He calls that knowledge, “innovation capital,” which allows him “to try new things — to change the organization, change the products, change what needs to be changed.”
AI Accelerates Touchless Future
When we talk to our clients about innovation and technology that could help their business, Artificial Intelligence (AI) is the example most cited. Within the application of AI in financial services, the example that follows is that of voice assistants and chatbots. As FIs struggled through the pandemic, many wished they had these technologies in place to augment or replace channels such as the branch or contact center.
In an article by Esther Shein for Tech Republic, the author investigates how “AI is accelerating the move to a touchless world.” Shein quotes a report by Capgemini where 54% “of consumers surveyed use AI daily, compared to just 21%” in the 2018 report.
“Contactless or non-touch interfaces are finding their way into numerous sectors, the report said. Over three-quarters (77%) of respondents expect to increase the use of touchless interfaces—such as voice assistants and facial recognition—to avoid direct interactions with humans or touchscreens during COVID-19, and 62% will continue to do so post-COVID.”
Often when discussing these technologies with our clients, we get push back from bankers that many people aren’t interested in talking to a machine.
While that is true for some people, Shein writes that “close to half (45%) want voice interfaces when engaging with organizations, followed by 30% who prefer chat interfaces, and 15% who prefer AI systems built in websites/apps.”
That preference is particularly stronger for younger customers. “about half of customers aged between 31 and 40 prefer AI-only interactions for researching and browsing, the Capgemini survey found. Overall, 41% of customers prefer AI-only interactions for researching and browsing, up from 25% in 2018.”
Self-Driving Money
While changing attitudes towards the application of AI in conversations between an organization and customers is to be expected, what if AI was on both sides of the conversation?
In an article in Forbes, Nik Milanovic of Google examines a future where money is “self-driving.” Milanovic writes:
“The premise of autonomous finance is that your finances should be ‘self-driving’: you set the destination, and the platform figures out how to get there quickly and safely. Some elements of this exist today: roboadvisors like Wealthfront or Betterment ask questions about your age, risk tolerance, and investment goals before creating and managing plans for you.”
Self-driving money doesn’t just start and end there. Through the application of existing “open banking solutions, like Plaid which link fintechs and banks together” and machine learning that utilizes common-language, a consumer or even a business can define rules that automate money movement and managing. Milanovic says:
“I should be able to say, ‘whenever I have spare money laying around, other than what I need for day-to-day expenses, reinvest it into whatever earns the highest return’
He continues, “After that, I should never have to think about what’s happening with my money, other than when I receive updates from the service on how it is being put to work.”
Many of the bankers we have met through the years would roll their eyes at the idea. They may liken the idea to fantasy, but Milanovic points to Anish Acharya, General Partner at Andreessen Horowitz who notes, “startups like Atomic, Astra, and Canopy are already starting to build gateless, autonomous fintech products.” Milanovic concludes:
“When they arrive, the future of money will look very little like the past.”
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