It was cold and rainy in New York last weekend. I rewatched two movies that got me thinking – The Matrix and The Imitation Game. These got me digging down “rabbit holes” (get The Matrix line here?) where I ended up rereading several recent articles.
Let me summarize each and give you my impressions.
First, late last year BNY Mellon began a major initiative to increase efficiency and profitability, including experimenting with robotics and machine learning to eliminate “repetitive, non-value-added work.” The projects they chose demonstrated a “high degree of accuracy and processing, reduced processing time and eliminated manual steps, all of which enabled them to redeploy resources to activities that create higher value."
Look at some key ideas here:
- Repetitive, non-value-added work
- High degree of accuracy
- Reduced processing time
- Eliminated manual steps
Second, The New York Times article uses a specific start-up example that scrapes data and performs analysis functions for firms like Goldman Sachs. What used to take over 40 man hours paying staff making $350k-$500k a year, can now be done by software in just a few minutes. Additionally, the software performs tasks that were previously so time-consuming, they were not even attempted.
One could freak out about jobs being lost to computer and AI, but disruption does not mean job loss. Two historical examples we were given:
- Cars displaced coachman and stable boys but created many jobs building cars, highways and servicing cars
- Growth of ATMs closed bank branches but increased number of staff required in call centers
The article stressed over and over how seriously the financial service industry is taking technology and automation.
Third, Antony Jenkins, former CEO of Barclays said in a speech last fall that FinTech will create a series of Uber-style disruptions that will have a significant impact on the financial service sector. He stated that incumbent banks will struggle to implement new technologies and will be forced to automate their businesses.
The article points out that the surge in FinTech is driven by:
- The 2008 financial crash – redundancies forced a lot of smart people who understood the world of finance to look for something new to do
- Dealing with increased regulations forced financial service companies to take their eye off customer needs
- The cost of starting a technology business has come way down
- The advent of cloud computing, pay-as-you-go, and rise of APIs allow for out-of-box tools to connect to various products
Look at this fact – just under one-third of Goldman Sachs’ employees are now engineers. Wow!
I get that most of you who are reading this are not CEOs and do not work for BNY Mellon, Barclays or Goldman Sachs. That does not mean you should ignore forces around you. There are many “tasks” that can and should be automated. With pricing structures today, you don’t have to break the bank to get started.
Don’t ignore the sea of change around you.