Video killed the radio star, so the song goes.
A question that has been thrown up a lot of late is whether technology will kill the private banker.
A recent report by management consultant Opimas LLC predicts that more than 200,000 jobs in banks across different work areas would be made redundant by 2025.
Of these, about 24,000 roles are in private banking and wealth management.
The 'culprit'? Artificial Intelligence, or robots, which are the latest worker of choice among financial institutions.
JP Morgan Chase & Co has been testing an AI system it calls LOXM in Europe since early 2017.
LOXM is being applied directly to trade execution and the bank claims it is the first to apply AI technology to real-time trades rather than just post-trade allocations as what most other banks are currently doing.
Other major institutions such as Wells Fargo and Bank of America have also set up innovation units, many focusing on AI, and are pumping millions into this area.
So are bankers really no longer needed once banks can get their robots up to speed in the complex world of finance?
I was recently asked the same question at a wealth management conference I spoke at.
I did not share the same sentiments as my fellow panellists, who all felt it was doom and gloom for the private banker. Here’s why.
1. Relationships can't be robotic
When it comes to private banking, relationship is key between a client and a private banker. That is why bankers are called Relationship Managers.
The banker needs to understand the client’s life cycles, needs, goals and so on.
A good relationship manager knows his client inside out, knows the client’s touch points or areas which they are particularly concerned about or interested in.
All of these information are then used to guide the banker in how he advises the client in their investment decisions.
It is not as simple as asking investors a set of questions and then classifying them into different risk categories – risk averse or risk bearing.
Humans are also better at assessing emotions. For example, after some time, a banker should be able to tell what sorts of market movements would 'scare' a client.
This can help the banker know which clients are more sensitive to certain market trends and to make sure that he or she calls that client first when it happens.
The sort of deeper understanding between a good banker and his client can only come with sustained human interaction.
We can't yet teach robots how to be ‘human’ in building relationships.
2. Technology helps, not kills, bankers
What we find is that clients want more ways to interact with their bankers and to be more involved in decision makings over their investments.
In the past, face-to-face meetings were considered the best option for a discussion.
But technology has made 'meeting up' so much easier – you can now use video calls on Skype, WhatsApp, WeChat and a host of other apps.
In the future, maybe relationship managers can even appear in a client’s home or office through a hologram. All these would mean RMs end up having more regular 'contact' with their clients.
3. Make things more convenient for clients
There are currently a lot of processes that require clients to come down to the bank.
Technology can help to reduce the number of trips they need to make to the bank.
One of the more onerous processes is the client onboarding process. This is where the bank has to get all the client’s details and documents for internal review before we officially have them as our clients.
But with facial recognition and other forms of biometric commonly used in passports and international travel these days, can the same technology speed up the traditional onboarding process?
4. Use AI to make intelligent investments
Bankers can also tap on AI to make better investment decisions for their clients. There is a huge amount of data out there, but very little is actually being analysed. In fact, studies estimate that only 2 per cent of all data is being analysed currently.
There is a limit to what humans can do in terms of the amount of different stocks, bonds or commodities that they can analyse in a day.
Being able to tap on machine learning would help bankers sift through the multitude of investment options out there and propose better opportunities for their clients. This is because machines can now also analyse unstructured data such as photographs, videos, music and social media posts, rather than just structured data such as a company’s earning ratio, stock returns and so on.
So, for example, AI can look at what is trending on social media and web traffic to assess growing demand for a certain product.
This could then translate to a call to invest in the company making that product.
In this way, a client does not need to wait for the company's latest annual report to come out before they make an early investment into the company. This increases the likelihood of investing before the company’s stocks begin to soar.
5. More efficient and productive
Within the bank, we can use technology to become more efficient and productive.
For example, our colleagues at the credit services department recently launched Sky, a robot that helps to churn out credit monitoring reports, one of the more mundane job functions in the bank.
This helps to free up two hours every day for every credit services officers. Imagine how much more valuable work they can do with those two hours!
The same can be applied to our relationship managers.
Bloomberg recently reported that private banks are increasingly trying to "squeeze" the most out of their private bankers.
Asian Private Banker (APB) estimates that, on average, relationship managers in Asia who cater to wealthy clients, are handling assets of US$341 million each.
At Bank of Singapore, our Chief Executive Officer Bahren Shaari earlier this year said that he wants to double each banker’s average assets to US$500 million through productivity and the use of technology such as AI and robotics.
An impossible dream? The technological advances in the last decade or so should tell us that nothing is impossible these days.
6. Sharing a wealth of knowledge
There is a wealth of resources and knowledge within the bank.
We have bankers who have been in the business for many decades and the knowledge and experience they have are like an encyclopedia, except that, more often than not, all these are stored in their brains and not in some shared database.
How can we gather all these information and knowledge, store them in a common database and make it accessible for every banker?
In a way, we create our own Google search for internal use.
This benefits our staff, and also our clients, who, if they need a certain information, their relationships manager can tap on this database and get the answer for them in an instance.
It is anybody’s guess what the future of technology would be. It is still too early for anyone to say how far artificial intelligence can go.
When the Internet first came about, nobody knew how pervasive it would eventually become.
What we do know is that humans will always try to harness the best technologies and use it to help us better our lives.
Rather than view tech with wary eyes, let’s celebrate tech as an enabler in our lives.
*A version of this article appeared in The Business Times on 31 May 2018.Disclaimer applicable to recommendation
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