Information and Communication Technology ( ICT) anchored the competitive evolution of Nigeria’s new generation banks, by unleashing productivity in the sector. Internet, through its unbounded distribution, has provided new business models for most of the banks. Banks today have digital banking unit which is growing, and outpacing other channels like branches. The dawn of digital banking has anchored a new strategic redesign, and the banks are moving more operations to the web. The customers are responding and banks are expanding customer base.
With these changes, banks are retooling how they do business in terms of human capital, and one thing has been consistent: banks are using lesser number of staff per customer. In other words, the man-hours required to serve a bank customer continue to drop. Productivity enabled by technology has made that possible. We now have ATM which has automated many tellers out of jobs. We have debit cards which have reduced the need for manual cheque reconciliations. As banking moves digital, new dislocations will continue to happen. The impact may even be more consequential in African banking because we can leapfrog therein.
There is nothing anyone can do about these redesigns: most jobs will disappear. From the challenging days of manual ledgers where Union Bank recorded transactions in papers, requiring bank customers to spend hours in bank halls, to the modern days of GTBank speed banking, Nigerian banking continues to evolve. They are using lesser number of staff, per customer served. While owing to growth, the staff strength may be bigger, the reality is that productivity has reduced the absolute staff required, when benchmarked with the trajectory few years ago. GTBank through technology leadership, as noted in its half-year report, captures it all:
The Bank has continued to report the best financial ratios for a Financial Institution in the industry with a return on equity (ROE) of 38.8% and a cost to income ratio of 40.2% evidencing the efficient management of the banks’ assets.
In other words, GTBank is using lesser resources to make more money. There is nothing wrong with that. Yet, what we are seeing today is just the tip of the iceberg.
Three Things After Bank Jobs
Robotics, artificial intelligence, and natural language are collectively after Nigerian bank jobs. ATM is a primitive service of the robotics. The same goes for the present reconciliation engines which run on bank’s general ledger solutions. But in the next 8-10 years, we will see massive adoption of the next level of technologies. I expect the Apple Face ID to be copied by other smartphone companies and that will find itself quickly into banking solutions. With Face ID, you will not have to worry much on agency banking because most components would be built in mobile devices.
Diamond Bank should work to drive agency banking with new technologies that will simplify the process and eliminate most of the inherent risks. People call them financial inclusion for the un-banked customers, but the reality is that a very innovative bank like Diamond Bank can unlock the value here, just as it used DIBS, to create value in 1990s.
BVN is an opportunity, and NIMC (National Identity Management Commission) provides even a richer source of data. The roadmap is to develop a technology that will help make citizens/shops extension of bank branches so that banks are closer to the people that need them, at better cost model. We do not need full scale branches to reach villages and communities. Technology provides the capabilities to scale this and also make it cost-competitive.
These are some of the roles the robots, AI and natural processing will pursue:
- Better customer service. We will see chatbots to drive customer service
- Process automation: from reconciliation to compliance, AI and robots will deliver higher efficiency, productivity, operational improvement and cost savings.
According to Cognizant, the top drivers for automation beyond cost savings include:
- Reduced error rates (21%)
- Better management of repeatable tasks (21%)
- Improved standardization of process workflow (19%)
- Reduce reliance on multiple systems/screens to complete a process (14%)
- Reducing friction (11%)
Beyond Banking Jobs
Sure, banks will cut some jobs but new jobs will be created because of the new services needed to service the post-AI banking. The following bank jobs are at risk.
…on the future of AI in banking, a study released by Oxford Martin School’s Programme on the Impacts of Future Technology evaluated how susceptible are jobs to computerization. Evaluating around 700 jobs, and classifying them based on how likely they are to be computerized, the jobs in the financial services industry that fit the studies criteria include:
Insurance Claims and Policy Processing Clerk
Claims Adjusters, Examiners and Investigators
Bookkeeping, Accounting and Auditing Clerks
What will happen in the near future is that we will have more software-bankers than tellers, because the jobs will be more algorithmic, meaning that the focus will be making better AI models. That means banks will also hire mathematicians (that do maths), and people that will help to build models and perfect them. While at the moment, banks have used the casualization of staff to compete on cost, in 8-10 years, they will use the deployment of AI, natural language and robotics for competitive edge through cost leadership. The transition will change the structure of the business because anyone that does not make that leap will struggle with severe cost-disadvantages..
The golden age of banking consulting is coming in Nigeria where startups with solid AI capabilities will rule. Banks will need services, customized and structured for the local Nigerian market. They have skills gaps which tech companies have to fill. The opportunities will be immense. The customization of Siri, Alexa, Assistant and Cortana to understand Nigerian pidgin speakers to enable banks deploy new solutions via voice opens a new market. The integration of Face ID to detect accurately black skins knowing that companies like Apple might have biased their models for white skins will create a boom.
In short, because of AI, robotics and natural language processing, fintechs will boom, not just in dealing with consumer market, but by offering solutions for banks’ back offices. It will take another level of composition for any bank in Nigeria to deploy any voice system in rural areas considering that our spoken English will confuse what Silicon Valley has built. Nigeria will need local flavors of most of these technologies. That is where the new jobs will be created in the banking sector..