Help, my bank advisor is a robot!

 

Retail banks in search of a new lease on life

 

It is obvious to anyone that the world of retail banking in France is flourishing and rapidly changing. Clients ‘ expectations are changing, Agency attendance is steadily declining (the rate of clients going to an agency once a month has dropped from 41% to about 5% over the last 10 years). In a saturated market (with an average of 8 products per customer, the rate of equipping customers with financial products is among the highest in Europe), the competitive pressure is stronger than ever, boosted by the emergence of fintechs and the clear development ambitions of GAFAM and other telephone operators…

 

The French retail banks ‘ revenues are no longer increasing they are even decreasing. It is time to look for ways to save money, and the announced bank closures will not be enough to counter the expected decline in profitability. Indeed, if customers turn away from their banking agency, less than half of them are ready to give it up permanently to opt for an online bank as their main bank. 90% of sales are still carried out in the branch and no major bank has ventured to close agencies massively; most just achieve savings in infrastructure and plan to close 10% to 20% of their sales points by 2020.

 

But regardless of the number of branches, their size and staffing levels are what the banks are now seeking to optimize. Initiatives are springing up all over the world to bring out innovative agency concepts. For example, for the past few weeks Bank of America has been experimenting with “no-advice” agencies: in addition to the traditional banking machines that can be used to carry out transactions, the client of these “new age” agencies can start a dialogue with a robot that will answer most of his questions about everyday banking, savings or credit, while having the possibility at any time to access via video-conference to a “flesh and blood” advisor for more sophisticated needs.

 

The digital transformation is (also) moving forward

 

For several years, digital financial assistants or financial coaches have been installed on our smartphones and tablets. They know our consumption habits, our financial situation and can even adapt to our moods. Available at any time of the day or night, with boundless patience and kindness, they provide real-time advice in a contextualized (or even geo-located) way to help us spend better or save better. It is so easy to offer the right financial product at the most convenient time! Artificial intelligence is no longer just an issue for labs but has become part of our daily lives. It is interfering in the banking world to offer management consulting services at a lower cost (robotic advisers) or to enrich the customer experience, notably through “chatbots” which are now able to respond in a fully automated way to more than 80% of customer requests. Email processing, instant messaging conversations, voice recognition, the fields of application are already vast, and technology is progressing according to Moore’s law, which augurs almost unlimited possibilities. AI not only has the ability to reinvent the relationship between the customer and their bank (accessibility, availability, reliability…), but it will also upset the economic balance by significantly reducing operational and transactional costs, or by allowing to analyze large data volumes, and to detect (and then exploit) any commercial opportunity much better than an advisor who is entrusted with managing a portfolio of several hundred customers.

 

Will robots replace financial advisers?

 

This does not mean that the profession of banking adviser is dying out. First of all, these technologies remain largely perfectible, and banks still often restrict their use to simple, even “non-banking” fields: Société Générale, for example, uses a chatbot on its Facebook page dedicated to rugby fans… Moreover, direct interaction with the customer will still remain for some time a must for “complex” sales, which need to develop a totally personalized argument in response to the customer’s questions and reluctance, and to provide him with a form of reinsurance through the trust that the advisor was able to establish with his client.

 

However, the profession is set to evolve. Without many of the time-consuming tasks facing them today, the banking advisers of tomorrow will have to be far more attentive, have far more expertise and show understanding for their clients. They will have to be able to interact with them in a fluid and powerful way via digital channels (telephone, electronic mail, videoconferencing…). This qualitative change will no doubt also be associated with a gradual workforce reduction in the banking networks. It is unlikely that the banks will implement redundancy plans in the next few years, but it is reasonable to expect that in the next 5-10 years, baby boomer retirements will be only partially offset by new hires.

 

After having conquered the world of industry, robots will no doubt change the world of financial services. Should we be concerned? Basic banking services are no longer sold; they are now bought… what’s more, through telecom operators (Orange Bank), newsagents (Nickel), or on the supermarket shelves (C-Zam) between peas and nappies. Customers’ needs and consumption habits are changing, the competitive environment is changing, so it is only natural that bank should also be transformed, that the adviser should concentrate on tasks with greater added value and delegate to the machine everything it is capable of doing (provided of course that it does it well).

 

Beyond the issues of productivity and performance, the real question will be whether the customer will approve and find a benefit in this new type of relationship? Is the replacement of humans by machines a real step forward? Or is this just another “droidful” idea?

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