Success will come to banks that maintain a socially conscious ethos in their transformation journeys
We believe that many technologies have reached a tipping point and that we’re now entering a time, within the next four years, when the importance of doing the right thing will begin to balance innovation. As stated in the Atos thought leadership publication, Journey 2022: Digital Dilemma’s, digitalization is becoming more and more about the ‘art of the permissible’, rather than the ‘art of the possible’. This will be especially true for the Internet of Things and artificial intelligence, two technologies that can have a far-reaching impact on social issues like privacy and equality.
This emerging crossroads of ethics and technology is a fantastic opportunity for the banking industry. Many of the big high street banks have long included a socially conscious message in their ethos, and well they should. More than any other industry, the banking sector has the power and the opportunity to do good. To build business models that support both the economy and people.
In order to achieve this, we believe that right now is the time for the banking industry to start to build a digital code of ethics into their business models. Technology can be a great enabler of fairness within the banking system – if guarded carefully.
We also believe that this will be a unique selling point for banks, considering the central and trusted role they play in our everyday life. So, what is our advice for the banking sector as they adopt emerging technologies?
The speed of business transformation has left governments and legislators behind the curve in terms of understanding the wider impact these digital disruptions will have on society and people. In no area is this more the case than in the use of data. As more and more means of generating data emerge (including IoT networks, drones, social media platforms, autonomous cars, etc), questions on data ownership, data usage, and privacy protection demand an answer.
Although new data legislation and regulation have indeed been developed (like the privacy protection regulation GDPR, and the seemingly opposing data sharing directive PSD2), more will need to come as these technologies and others continue to develop. Particularly in the banking sector. After all, there cannot be a point at which your bank has access to personal data that may work against an individual. If this ever happens, the consequences will be dramatic, and the sector will have irrevocably broken its sacred bonds of trust with society.
Can you undo?
Proper handling of all that data coincides with the maturing of artificial intelligence, which gives us a tool to not only cope with the sheer volume but also helps us to draw the best conclusions and make the best business decisions. As you build a machine learning algorithm for AI, it begins to learn and evolve and eventually draw its own conclusions.
Not only can machine learning allow a system to evolve, but the algorithms used for this are only as unbiased as the programmer or data scientist who built them! In the end, an organization will still be responsible for justifying the decisions it takes, whether they’re made by a machine or a person.
And so we come to the ‘ethics by design’ principle. We must build access into the system to allow for reversal or even a total switch off function. People, therefore, must always remain a vital part of the process.
To automate or not?
This discussion on the effects that artificial intelligence can have on a bank’s treatment of its clients can leave the impression that it may be best not to automate at all. A seemingly logical conclusion, but not very realistic. The volume of data that needs to be handled and the growing strain of industry regulation would mean that the financial repercussions of (continued) fully manual processing of banking functions would cause an immediate collapse of business models. And of course, then there would still be no guarantee of ethical behavior.
The balance between automation and human work can be explored though. The physical bank is an important differentiator for the traditional players to use to their advantage. As AI can give your customers the most personalized experience, the physical bank branch can reach the equally (if not more) intimate results through direct human interaction. Again, the question is not if AI can replace the bank’s contact with clients, but how AI can best be applied within certain channels, to improve the client’s experience with their bank.
Create the culture you need
But the most important factor will be cultural. This can be the hardest part of an organization to change. Culture will decide how much digitalization we are willing to embrace, both from a client relationship perspective and from a workforce perspective. And even though culture is difficult to change, culture by its very nature will naturally evolve. We, therefore, recommend building code of ethics (either self-regulated or imposed by a regulator) that is flexible enough to deal with continued technological change – because it focuses on principles, giving the right direction on how to deploy emerging technologies without fixating on specific temporal examples.
In the end, what we have been talking about here is adopting Corporate Digital Responsibility – Corporate Social Responsibility (CSR) for the digital era. We believe this area will become as vital to business as CSR has been. Not just because it is the right thing to do, but also because it will position a bank as a leading force for our society’s digital journey and so set it apart from its (emerging) competitors.
So in conclusion, our advice to our clients is that they must be ahead of the curve on this issue. As stated in Journey 2022: Resolving Digital Dilemma’s: “wait and see cannot be a viable option for digital transformation".