When a robot comes for your job, the Smithsonian Institute recently wrote, you should think back to the Luddite revolts of early 19th Century Britain. Alarmed by the extent to which their skills were being replaced by mechanised labour, textile workers began to organise and agitate, going as far as attacking factories and factory-owners and destroying the machines they saw as a threat to their livelihoods. The term Luddite is still used to describe someone with a profound dislike for technology, whether it’s a loom for weaving cloth or a hi-tech robot.

In most walks of life, the intrusion of robots will be limited to artificial intelligence (AI), machine learning (ML), and the increasing use of automated processes. The humanoid robot as depicted in popular culture will be uncommon in most of our lives. But that doesn’t mean the potential for disrupting existing patterns at work or in our homes lives isn’t substantial. The challenge for business leaders will be to steer their organisations through these uncharted waters, avoiding collisions and reaping the rewards.

Change: internal, external, and inevitable

Change can be unsettling, that’s just part of what makes us human. Therefore, the successful adoption of change calls on leaders to highlight the positives and build on the benefits to create opportunities for the future. If we look at the impact automation will have on the way regulations are complied with, we can start to see how some of these benefits begin to take shape.

There is, undoubtedly, a heavy regulatory burden on the financial services sector. We feel it even more keenly here in the fintech space. You could choose to view it as little more than a burden, of course. Red tape, cumbersome bureaucracy, and so on. Too much regulation can stifle productivity, and risk creating an environment in which change is almost impossible to imagine, let alone achieve. The German sociologist Max Weber was one of the first to raise this when he put forward his iron cage theory. Structures, processes and bureaucracy develop over time can become disconnected from the original stated purpose, he argued. They start life as a worthwhile endeavour to improve the way of working, or prevent problems. But human nature can obscure those benefits in time. If one’s view of how things ought to be done is overly-influenced by the way things have always been done, how can you come up with new ideas?

It’s an interesting point, and while Weber is right that simply adhering to pre-set patterns of behaviour can stifle creative thinking and problem solving, I see compliance in a much more positive light. As part of your strategic vision it becomes a tool for adding value rather than being an iron cage.

Compliance creates some of the most important factors in any market — certainty and a level playing field. It’s important because it compels organisations to align to the societal, political, and legal framework of country. At its most basic, this offers protection against a series of potentially damaging behaviours, and consequently offers reassurance to the end-customer that if something goes wrong they will have recourse in law. Without trust you can’t move forward, and nowhere is that more keenly felt than in the finance industry.

From the Sarbanes Oxley Act to the European Union’s GDPR, there are a lot of complex regulations that global businesses need to stay abreast of. Staying compliant is more than simply reading the rules and ticking all the boxes. Your business is made up of many moving parts and is always adapting, evolving, changing. Every change has the potential to compromise your compliance status, and for a financial services business with a global footprint the implications are profound. Regulations are often in a state of flux – subject to amendments, additions, and updates. When you’re operating in multiple markets concurrently, the likelihood of having to deal with changing regulations multiplies, meaning that across several different jurisdictions many different agencies and organisations may be making decisions that could impact your operations. Failure to stay ahead of compliance changes comes with a very high price tag – fines, revocation of trading licences, maybe even legal action against company executives, and host of other possible penalties both short and long term.

That’s a significant motivation to stay compliant. But with potentially thousands of small components across your business waiting in the wings to undermine your best efforts, managing compliance is a costly and resource-heavy undertaking.

Basic skills are a falling stock

The automation of routine tasks to ensure things are operating as they should is becoming increasingly commonplace. Using AI and ML can deliver three very significant benefits — enhanced speed, accuracy, and reliability. All this comes at reduced cost because you don’t need an army of people constantly checking and fixing routine operations.

In a recent study, McKinsey & Company (Skill Shift: Automation and the future of the workforce) says that “social and emotional skills (and) higher cognitive skills” will become increasingly sought after as demand for them grows. The same report says the demand for more basic skills, such as those associated with routine data input and processing, will decline by 15%. Think back to the Luddites, witnessing the falling demand for their work and suffering the consequences of a drop in income — they felt threatened and rose up in anger. Will we see the same here in the 21st century as automation spreads? In fact, I think not.

An ambitious, growing business should always try to find opportunities to redeploy people away from mundane, routine tasks and direct them to more valuable efforts. That might involve an element of retraining and redeployment, naturally. But it needs to be part of a strategic plan that embraces automation and uses it to build sustainable competitive advantage and commercial opportunities.

Culture unlocks competitive gains

For example, at Finablr it has always been important to me that we embrace compliance as part of our culture rather than merely ticking boxes. Adhering to regulations enables us to build customer-centricity into everything we do and — just as importantly — demonstrate it, too. You can do that with teams of people. Or you can automate processes, thereby improving delivery and lowering cost.

Smart algorithms, using machine learning, go beyond where automation has traditionally been used. You no longer need to programme them to perform discrete tasks. Instead, they improve their performance as they go, learning all the time, which increases their effectiveness and the value they deliver to the business.

This is an approach we’ve adopted on the cybersecurity and compliance sides of Finablr. One of the direct consequences of that has been to reduce the number of false positives we see when checking transactions. We’re saving time, we’re saving money and reducing delays, which improves service delivery. Instead of processing 1.5m transactions, we can process 3m. Plus, it frees up resources to focus on more demanding tasks, priority cases and so on.

Honest conversations about change must include a thorough assessment of how automation can enhance an organisation’s reputation and commercial sustainability to the benefit of all. It will be important to acknowledge that periods of change can be unsettling, too. After all, if we try to deny such an obvious truth, it will make everything we say seem lacking in credibility.

But far from seeing the march of automation as a potential reprise of the Luddite Revolt, now is the time to identify opportunities to educate and inform our workforces and customers about the positive changes to come.


This article originally appeared in Banker Middle East.

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