AI is on track to send millions of bank workers to eternal call waiting
AI

AI is on track to send millions of bank workers to eternal call waiting

Business leaders are finally fessing up to the fact that artificially intelligent enterprise software is going kill thousands of service jobs.

Michael Corbat, CEO at Citigroup (C) , told the Financial Times Monday that AI, coupled with digitalization, could help eliminate tens of thousands of jobs at call centers.

It’s the new reality, and it’s coming fast.

Customer service is a tough nut to crack for banks. Despite all the money they spend developing online banking, smartphone applications and automated teller networks, customers still want to deal with other humans.

Citigroup spends $8 billion annually on technology, according to FT, and the firm still employs armies of call center workers.

They are the last line of defense. They help cancel lost credit cards or explain why you can’t see your electric utility payment online.

But paying them is costly.

In a test of Google Duplex, a new technology for conducting natural conversations to carry out real-world tasks over the phone, users were none the wiser that they were chatting with a system and not a person.

Bankers hope to eliminate most customer service reps by digitizing the processes they perform. You might have noticed the prevalence of self-service menus online. With the right software, it’s easy to cancel a lost credit card without ever talking to anyone.

The next step is implementing the right AI software, to help assist customers who want or need some sort of interaction with a company representative that doesn’t have to be human.

At the Google I/O developers conference last year, Alphabet showed off software it called Duplex. The showstopper was an AI bot that sounded like a human, could carry on a reasonably intelligent conversation, and was capable of taking instructions.

Duplex was like a personal valet.

The software was able to make hair appointments at local salons. It even made a reservation at a busy Chinese restaurant.

Humans were none the wiser.

There was some outrage. How dare robots fool humans. There was some disbelief, too. Duplex seemed far too advanced. It couldn’t be real.

But it was and is. When Google rolled out its Pixel smartphone in October 2018, Duplex came bundled as a service called “call screening.”

And if Google can build the software to run on a mobile phone, you know it’s possible to have similar software run at a call center.

AI is coming fast, and it’s freaking out people because they can see how disruptive it might be in the real world.

Bankers have been clamoring for more AI, faster for years. In 2017, Vikram Pandit, Corbat’s predecessor at Citigroup, told Bloomberg that better AI could reduce headcount at the bank by 30%.

Deutsche Bank CEO John Cryan told a London audience to expect a bonfire of bank sector jobs.

I’m fairly certain they meant this as a good thing, as it reduces costs and increased profitability. And sure, they will make the case it leads to a better user experience —  but they claimed the same of automated phone trees, too. I’m still waiting for my positive touch-tone phone menu experience.

McKinsey & Co., a global consulting firm, estimated in 2017 that as many as 800 million jobs could be lost to automation by 2030.

Creative jobs were safest. Those working in the banking sector were most at risk, and for good reason. Their jobs are mostly repetitive and require only modest analysis. There is also the grim reality their leaders are itching to drop the ax.

Investors should continue to focus on the first part of the process. Digitization is the sweet spot right now. Bank bosses are deploying customer relationship management software at breakneck pace. They are laying the groundwork for the jump to AI bots and other software trickery.

Investors should listen to Corbat when he speaks. “We still have tens of thousands of people in call centers, and we know when we can digitize those processes,” he said “we not only radically change or improve the customer experience, it costs less to provide.”

Salesforce (CRM) is by far the company best positioned to digitize the customer service process. It has the best software, according to industry experts like Gartner. It also has more access to leading Fortune 100 firms than any company in space.

Unfortunately, shares are not exactly cheap. The stock is near record highs, trading at 58.3x forward earnings and 9.8x forward sales. The market capitalization has surged to $123 billion.

Longer term investors can safely buy the stock into the next decline toward $130.

Best wishes,
Jon D. Markman

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Comments 5

Rich February 21, 2019

You know I am so sick of this supposed robot revolution. What kind of great society will we have when the robots take all these jobs. Sure it is mostly the blue collar worker for now, which I am one of but at some point it will be the white collar college educated worker as well. If we have no jobs, we can not consume because we will have no money or at least very little if we are on welfare because we lost our job to a robot. I contribute a thousand a month in taxes with my job currently but if I am out of a job I will be a burden to the few that have jobs. This is not going to work. Robots do not pay taxes nor are they consumers. Let us say that all the trucking jobs which there are now millions of people employed are at some point taken over by robot trucks which to my way of thinking is a very scary scenario and one of which I am to the extreme against. What if my family were mowed down by one of these robot trucks ? OH woops sorry, technology glitch. Will the cost of shipping goods go down having robot trucks with no labor content ? No of course not because the greedy robot trucking owners will not only want to get their added investment back in robot trucks but they will want ever higher sky high profits. This very tiny percentage of people will become multi billionaires while the rest of us live in total poverty. What they do not realize is that if the majority of us have no jobs than we are unable to be consumers. How basic is this ? Who will these robot trucks be shipping products to if there are no consumers ?? What about all of the robots that Darpa ie The US war machine is working on ? Did any of these people watch the Terminator ?? This does not end well for humans. That future is coming way to fast ..

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maxb reply_all Rich March 11, 2019

@Rich obvious thought…..someone will need to service AI (machines), develop better AI, write software to support AI……….soooo Rich with your negative thinking you will never consider (re)training to continue to work and pay taxes……. good luck dude !!!!!!!!!!

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Charley February 21, 2019

I find call centers already so ridged that they may as well be robots. They read a script and cannot deal with deviation. Either no one has brains, or they aren’t allowed to use them. Maybe if they use robots the voice will be clearer and the speaker system one of high fidelity. In hiring there seems to be no consideration for someone having a clear, pleasant voice and brains. It is amazing that companies seem to consider “customer service” a bother when it is part of the sale. My questions are very rarely one of their FAQs. Automation is always the inverse of flexibility.

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John Butler February 21, 2019

Hi from the UK,
1 – What about our older group? They cannot afford a smart phone (I am 73yrs and have great difficulty using them)
2 – What about no income to older folk, no job, no assets,
3 – The ones on the street?

I could go on, but you can guess the rest.

Your work is excellent. THANKS
Kind Regards

John B.

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ed the grocer February 20, 2019

My business and my three children are well involved with technology. Our discussions have one teensy little problem floating up. Companies and government are not only planning to replace skilled technicians with AI, the Middle managers are already gone. The’app’ or on-line program may have been partially designed by a Middle manager but the newer version will be produced by a programmer with zero knowledge of the industry or of possible problems. It is bad enough that First Line service has become a Q&A screen shot handled by some guy in India or Serbia, what happens when critical services are handled in the Cloud with no one anywhere. It is nearly silly. My last attempt to deal with a government tax department was met with, ” The subscriber to this number ( 800 help number ) has requested that it no longer receives calls.” A second On-line help line number found deep with a large web page referred to the first number. Result; I’ll keep my money.

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