Technology will be the key to operating in a post-coronavirus financial world, writes Clara Durodié of Cognitive Finance Group.
We are in the midst of the worst health crisis of our lifetimes. We have seen markets falling into the abyss, panic, fear and confusion taking over our lives and work. One by one, countries have entered lockdown in an attempt to manage the spread of Covid-19. Experts tell us that flu pandemics recur reliably but unpredictably every decade or so. Even so, the markets are in freefall and our work is being disrupted at a head-spinning rate. Things will eventually return to normal. They always do. But it will be a new normal.
There are many examples which demonstrate that innovation picks up speed during hard times. In my lifetime, I have experienced a few recessions and market crashes, and I have seen changes in behaviour and innovation. The fintech industry gained momentum after the 2008 financial crisis. It pushed customers away from branch banking to online banking. Software procurement has also changed from licences to software-as-a-service. This has led to cloud computing services and the growth of storage and pay-as-you-go software. With it, cashless payments and fintech solutions have proliferated. Companies such as Amazon and Google have built an enduring presence, including in our industry, and even at the markets’ lowest ebb they delivered substantial revenue gains. It is likely that we will see more companies investing in technological innovation, particularly in artificial intelligence (AI).
A large part of the investments will be addressing current problems derived from dependency on legacy systems, because most decision makers haven’t been prepared for taking drastic measures to change the IT infrastructure.
How much data?
As we are fighting coronavirus, we are in wartime conditions. It is a war that we will win. Sadly, there will be casualties. We need to use every tool we have, including technology, to win this war. When this crisis ends, our social and work landscape will be forever changed. Many will use this crisis to advocate strict monitoring of office space and staff, perhaps compulsory activity trackers will become part of our employment contract, and our body temperature will be measured when we enter work just to rule us out as potential sources of infection. Everyone will be safer, companies will say.
However, we will need to take a closer look at the type of data collected, and decide what to allow and what to reject. Is a compulsory temperature check essential every day we enter the office, when there is no pandemic? Will cashless payments using gestures and biometrics such as iris scans and face recognition be essential in normal times?
In a world left traumatised by the current crisis, we need more than ever to invest in trusted AI: robust, unbiased, explainable and fair AI that builds trust rather than destroys it. Trust is what we must preserve. It is the most important value that defines our industry.
Questions for the board
Technological innovation will accelerate. The infrastructure we rely upon to work from home during the lockdown is delivered by AI-first companies: Google, Microsoft, Apple. In the same way, in our industry the winners will be those who invest in building vertically integrated AI-first companies. Not only will they build a profitable business, they will dominate this industry.
This is a long-term strategy in which corporate boards play a crucial role. Boards themselves need to change their composition and bring in AI experts with deep sector expertise. An MIT study found that a digitally savvy board is the “new financial performance differentiator”, with 38% greater revenue growth and 34% higher market capitalisation. AI experts are good business, and essential if companies are to become AI-first. Not adding AI experts on boards will likely equate to eroding shareholder value and undermine the company’s competitive position.
Clara Durodié is a technology strategist specialising in applied AI in financial services, with a focus on ethical AI for business growth. She is the executive chair of Cognitive Finance Group, board director of Altilia and author of Decoding AI in Financial Services.
