Technology and the future of finance

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Will your banker become a robot? And is this such a bad thing?

The application of technology to finance has gone mainstream.  Investors (speculators, really) are lining up to be fleeced on the Bitcoin and cryptocurrency exchanges all over the world.  On the same day that Bitcoin slumped to half its December value – it was just over $10,000 per coin on January 16th – so one Saxo Bank analyst predicted it could rise to $100,000 per coin at some point.

Blockchain, the algorithmic foundation under Bitcoin, however, continues to be applied to an increasing number of truly valuable functions across finance, commerce and government.  In a recent report to the UK Government, the Chief Scientific Adviser, Professor Sir Mark Walport, wrote:

“[blockchain technologies]… should not be seen as an end in themselves. It is only when they have other applications — such as smart contracts — layered on top of them, that their full potential can be realised.”

And blockchain is just one of several umbrella terms to describe technologies reshaping the way finance will work: robotics, AI, big data and cloud computing are others.   Anyone who actually works with or near these technologies realizes that these umbrella terms are as imprecise as using the word ‘finance’ to describe a myriad of functions performed within, for example, just one bank – let alone a national or global system.  But it is true to say that Fintech (financial technology) is an increasingly important part of the future of finance.

What you do with technologies is vital

However, the point Sir Mark is making is that, whilst the technologies themselves are important, it’s what you do with them that’s vital.

Technology, particularly digital technology, almost always starts as a way to do something you already do more efficiently than you already do it.  A spear is more efficient than a rock in hunting deer. In the same way, a simple computerised ledger with manual input is more efficient than a man in fingerless gloves writing in a big book with a quill pen. And blockchain is way more efficient than a computerised ledger held in one place with data punched-in manually.

Blockchain and fintech in the wider sense are still mostly at the ‘doing the same thing better’ stage.  But the word ‘doing things better’ in business is often a euphemism for ‘firing workers’ – so will we use these new financial technologies to put people out of jobs? In short, will your banker become a robot?  And is that a bad thing?

Much of the current media narrative is about the threat that these technologies pose to employment and thereby to societal cohesion, economics and even the capitalist system itself.  But I believe that threat to be overdone.  The bank of the future will use robotics, AI and many other new and emergent technologies but your banker, she is unlikely to be a robot.


Richard Banks is consulting editor to Euromoney Conferences. The opinions voiced in this article are his alone.

The GCC Financial Forum 2018 – co-hosted by Euromoney Conferences and the Economic Development Board of Bahrain – will be held in Manama on 20 -21 February 2018.

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