Artificial Intelligence, Algorithms, Big Data & The Future of Banking

Futurist Mike Walsh has good news and bad news for financial services executives leading and working in the Algorithmic Age. Jobs won't go away, but they will change radically and sometimes the smartest move will be to kill your own job and reimagine the process and your place in it. He discusses his 10 principles for survival in the new digital ecosystem in an exclusive Banking Transformed podcast interview.

Where do leaders start?

Walsh: The best place to start, whether you’re a new or existing organization, is to change the language of making decisions. You’ve got to figure out how to become data driven. More than just using data for reporting, being “data driven” means that data becomes the framework for discussing and analyzing opportunities.

Part of the learning is to be more probabilistic. For instance, one of the interesting leadership principles at Amazon is “disagree and commit.” What Jeff Bezos is saying is, “Leaders might disagree with an idea that their team brings forth, but rather than that team wasting time trying to convince that leader to commit to the decision, they should collect data to see if it’s correct or not.”

This allows organizations to course correct but still take action quickly – that’s what it means to be data driven. It’s about embracing uncertainty, taking almost a Bayesian approach to the way you analyze probability and the likelihood of success, and finding a neutral way – without politics – to be able to analyze seemingly crazy ideas that might come from anywhere.

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Could banking become ‘invisible’ in the future?

Walsh: In the future, there are things that occur that would still require some form of banking engagement. But for [banking to become invisible], the consumer has to essentially change their way of viewing banking. Today, you’ve got organizational and legal structures that force a consumer to jump through hoops, many of which are not transparent. And if the consumer skips any steps or doesn’t do something exactly right, they basically go into a bucket where they’re being penalized.

It is so much more effective if the bank, or some sort of next-generation financial intermediary, finds a way to leverage data and algorithmic design, to insert themselves into various parts of someone’s life without them even really fully being aware of it. That’s when we start to build a very deep and integrated and symbiotic relationship with the consumer in the future. Payments is one area where we’ve started to see little bits of that.

How do you view the future of work in banking?

Walsh: The question is not will we lose jobs, but how will jobs change? Even when the computer age began, it wasn’t that computers took jobs away from people. People with computers took work away from people that were unable or not prepared to use them.

So, to understand the new shape of jobs you need to ask, “How do computational algorithms of data change the performance of an existing function?” We already see algorithmic or computational accountants, computational architects, computational lawyers, etc. But, these are the same jobs and professions enhanced or augmented with the use of machine intelligence.

However, rather than nurturing someone with many years of experience so they can make a good decision or recognize a pattern, you may say, “Your job now is not to make the decision … it’s to design or train a model that will actually be making the decision on your behalf.” It’s a new type of relationship that you have, and in many cases it’s a much more difficult and cognitively demanding job. But, it’s also something that is more purpose driven and more meaningful and more interesting than simply doing things the same way all the time.

What do you mean, that leaders should solve for purpose, not necessarily profit?

Walsh: First of all, we need to understand that not every company has to save the world, or solve climate change, or end world hunger in order to be meaningful. What organizations must do, however, is to make sure that they’re designing work and jobs and careers that are filled with small achievements. In other words, employees must feel that the work they do is meaningful.

One of the most interesting case studies in this area is ING Bank. I spoke to Peter Jacobs, their former CIO. He told me one of the reasons why they reorganized the bank using agile principles into tribes and squads (a bit like Spotify) was not just for efficiency or because it was more agile, but because it allowed them to give the new young talent a greater visibility into the delivery of their projects. It allowed them to bring more purpose back to what they do, a sense of craftsmanship. Rather than working on a tiny piece of a giant project, it allowed employees to have more authority and influence on a smaller project.

These are the kind of tactical changes to the future work that often don’t get talked about that will have an immense impact on people’s well-being — and the extent to which they enjoy their work.

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