Monthly Archives: July 2017

I recently taught a graduate school banking class where, at its conclusion, a student said, I just want to thank you for not being an alarmist. But that comment puzzled me since most of my subject matter was about the rapid change in the industry.

In fact, in scores of speeches in recent years, I have worried that I might be putting off some folks with my preaching about the need to re-evaluate strategies and practices. My mantra to banker groups has been, Evolution does not mean elimination. Failing to evolve, however, guarantees elimination.

I inquired with the student why he thought I was not alarmist. He said he has felt immersed in doom-and-gloom talk about the banking industry. It seems like some people believe that the key to success in banking is to get rid of just about all of our branches and most of our bankers.

He added that he appreciated hearing a message about bankers continuing to be at the center of the industry that banking will still be about relationships and working with communities regardless of the technology banks are using.

His statement crystallized a thought in my mind. Much of the fear our teams experience amid the predictions of bankings future derives from not understanding how (or for that matter, if) they will be a part of that future.

There have been fervent predictions for years that branches and branch jobs would not be long for this world. Most have been wrong, but there have been modest reductions in both in recent years.

One thing to bear in mind is that a nontrivial portion of branch closures (by larger banks) are attributed not to banks trying to do more with less, but realizing that they need personnel and real estate to make a branch strategy work. These banks exited markets where they had a relatively small branch presence and therefore less ability to operate an effective network. It can be argued that many closures were actually acknowledgment of the need for robust branch networks.

Meanwhile, stories of increasing automation in other industries also contribute to the tensions felt by some of our branch managers and front-line bankers.

An example was McDonalds stock hitting an all-time high recently after announcing an aggressive rollout of automated ordering kiosks to replace many cashiers.

Shortly after that news, I was asked if the McDonalds story was more evidence that technology will replace front-line employees in most businesses, including banks. I suggested that it is definitely likely there will be fewer folks with the title of cashier. It is probable that McDonalds will need fewer total employees per restaurant to produce the output they provide now.

But I added this caveat: McDonalds kiosks will not be preparing the food, serving the food, keeping the restaurant clean or managing the teams. Kiosks will also not be resolving ordering mistakes or stepping out to assist a customer needing help. Kiosks will not be assisting with childrens birthday parties at McDonalds or chatting with the regular morning coffee crowds. Kiosks will not smile and thank customers.

What kiosks will do is turn over a few of the most basic tasks in a fast-food restaurant to customers. For easily understood and frequently repeated tasks, self-service technology may actually produce improved customer satisfaction.

Nevertheless, we will not be looking at employee-less operations in these restaurants. The business will still rely on competent teams of multitasking individuals in each store.

No, I do not believe that fast-food restaurants and bank branches are an apples-to-apples comparison. However, whether it is bank branches, restaurants, airport ticketing areas, Amazon-influenced grocery stores, or any number of businesses, talented and engaged employees will remain integral to their success.

I frequently suggest to managers of all levels that if they intend to lead their banks in the future, they need to lead their bankers into it. Our better employees are not as concerned about future staffing models needing fewer personnel as they are in knowing that there will be critical new or modified roles for them to fill.

Your best employees know and accept that evolution is inevitable. When you help them see that the future success of their bank will still rely on core groups of good people, they will be far more likely to remain engaged in building and fulfilling whatever new and improved business models you implement.

Dave Martin is a consultant specializing in retail banking strategies, including in-store branches. He is the founder of the retail bank performance company bankmechanics.

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Message to branch staff: Don't fear automation | American Banker - American Banker (subscription)

We are walking down the strip in Las Vegas in the year 2035.

The lights are glaringly flashing, music is pounding your ears, the usual nine Elvis look-alikes try to pose with you for a few dollars. A few robots are crisscrossing between the legs of passersby, offering ticket services, information and to be their guide. Self-driving vehicles bring gamblers from casino to casino. A robot group performs a break dance, and you can compete against Robo-MJ in basketball.

Vegas is still Vegas, so nothing has really changed. Or has it?

Maybe it wont be visible to the eye, but robots may have taken the place where people currently toil to keep the Vegas machine humming. About 65% of all jobs in Vegas are susceptible to automation by 2035 a bigger share than in any other part of the country. Across the U.S., 55% (or more) of jobs in almost all metropolitan areas face this same scenario.

Who will be at risk? How many jobs will be lost by then? And what will life look like?

Scientists are heatedly debating whether robots and artificial intelligence (AI) will appear as colossally in our lives as some studies predict. Will we really see mass adoption of robots and AI gadgets?

The reality is both technologies already have seen mass adoption and it is foolish not to expect it to accelerate. Every smartphone already is essentially an AI device, and 1.5 billion of those were shipped in 2016. Some 1.6 million industrial robots operated worldwide in 2015, a total thats expected to increase to 2.6 million by 2019.

Research shows that if all these 1 million additional robots worldwide are merely as productive as those that already exist, each robot would on average replace the work done by 5.7 U.S. workers, or 5.7 million workers in all.

More worrisome is that if robot adoption continued to grow at the same pace beyond 2019, about 18 million industrial robots would be installed worldwide in 2035 and would perform the work equivalent to about 100 million U.S. workers. Put another way, this robotic workforce would be capable of producing the equivalent of the current manufacturing output on the entire planet.

Then there is the robotic invasion of the service sector, where most Americans work. Machines have already displaced service workers over the last few decades (think ATMs and self-checkout stations in grocery stores), but added intelligence allows machines now to take on tasks from room cleaning to radiology.

How quickly this transition can happen can most easily be seen in household services, where robots can substitute for hired services. In 2015, 3.7 million household robots were sold worldwide and that is expected to jump to almost 31 million annually by 2019. At growth rates after 2019 similar to those we currently see in industrial robots, we can expect annual sales of about 220 million units in 2035.

Right now, these robots mow lawns and clean carpets. They serve food and mix drinks in bars; by 2019 they will perform X-ray analysis with higher accuracy than the average radiologist can provide.

What could they be doing by 2035? Almost everything routine, including highly paid tasks such as routine surgery, regional economic analysis, and flying commercial airplanes.

So the key to understanding what may happen to Vegas and the rest of the U.S. service sector is that the recent advances in robotics and AI make those technologies continuously more affordable. Additionally, hardware in many AI applications is less costly than entire robots. Self-driving cars and trucks dont need much more than added intelligence, and similarly for vacuum cleaners and lawn mowers.

More than 90% of U.S. workers are in a service job, ranging from cashiers to surgeons. Given the expected high speed of this transformation, it will be a gigantic challenge for the economy to create additional or entirely new jobs at the same pace as robots can replace existing jobs.

What will Vegas look like when you drive down the Strip in 2035? Most of the automatable jobs wont be in the streets, but in restaurants, offices and retail stores. Some 54% of all automatable jobs in Vegas belong to food preparation and serving, office and sales occupations. Where the robots will really make a difference is mostly in jobs at the lower end of the pay scale. But thats not going to last.

However, not all jobs that can be automated will be automated. It is hard to imagine a high-end jewelry store or designer boutique without sales clerks or a gourmet restaurant without waiters. However, not only will their back offices be staffed more thinly but their sales strategies will likely also change. Foot and even full-body scanners are already available to find the perfect size for shoes and clothes, which can speed up the sales process. And why not have them made to order right on the spot from a machine? Point of sales and point-of-use production are just around the corner.

Whether we all will be able to benefit from this brave new world will depend on our ability to bring education and lifelong learning specifically to those at the highest risk of automation. Those with less than a high-school diploma face a six times higher risk losing their job to a robot than those with a doctorate, such as a Ph.D. or MD.

Given the uneven distribution of education and jobs across racial and ethnic groups, hispanics are 25% and African-Americans 13% more at risk to lose their job to automation than whites. Twice as many women than men work in occupations that are at an especially high risk of automation, such as tellers and cashiers.

Our political leaders are remarkably silent about this issue, despite its explosive potential for the labor market and beyond. By comparison, the historical effects of trade policies are mere ripples on the water. It is hard to imagine a scenario in which the U.S. can scale education and job creation as quickly as international competition for the robotics market can scale the production of robots and AI devices.

And this prospect sends cold shivers down our spines.

Jess Chen is a research fellow at the Institute for Spatial Economic Analysis at the University of Redlands and leads the Institutes research efforts on the effect of automation in the workplace. Johannes Moenius is a professor of global business and the director of the Institute for Spatial Economic Analysis at the University of Redlands. He holds the William R. and S. Sue Johnson Chair of Spatial Economic Analysis and Regional Planning.

Excerpt from:

Opinion: Two-thirds of jobs in this city could be automated by 2035 - MarketWatch

Drawing senior business and IT leaders, the ISG Automation Summit will take place July 10-11 at the Roosevelt Hotel in Manhattan, the first of two ISG Automation Summit events scheduled this year. The second will take place in London, September 19-20.

The New York event will feature keynote speakers from BNY Mellon, TNG (formerly The News Group) and McKesson who will share their automation success stories. Other enterprise speakers include representatives from John Hancock, Bell Canada, AECOM, U.S. Bank and Ascension Ministry Services.

Automation experts from ISG will share lessons learned from advising a broad range of clients on robotic process automation (RPA) initiatives, revealing how to deliver on the promise of automation and avoid the pitfalls, including the importance of managing organizational change. ISG also will share valuable industry research and discuss the next wave in automation: cognitive computing.

Among automation software providers, IPsoft will be a featured speaker, and representatives with Automation Anywhere, Blue Prism and HCL also will speak at the event.

"Talk of automation and AI is everywhere today," said Mark Davison, ISG partner, Robotic Process Automation. "At this event, we will separate hype from reality and share practical, real-world experiences on how to successfully begin and continue your automation journey everything from deciding which processes to automate, to selecting the right business partners, to preparing your organization for change while looking ahead to the future of artificial intelligence and cognitive computing. This is a must-attend event for anyone interested in leveraging the power of automation to become more efficient and achieve their overarching business goals."

More details about the ISG Automation Summit in New York can be found at the event website.

About ISG ISG (Information Services Group) (NASDAQ: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including 75 of the top 100 enterprises in the world, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 professionals operating in more than 20 countriesa global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry's most comprehensive marketplace data. For more information, visit http://www.isg-one.com.

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SOURCE Information Services Group, Inc.

http://www.isg-one.com

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ISG to Host Inaugural ISG Automation Summit - PR Newswire - PR Newswire (press release)