Intelligent Automation, Robotic Process Automation and it’s impact

In my last blog I touched upon Intelligent Automation broadly covering Machine Learning, Autonomics, Machine / Computer Vision and Natural Language Processing.

I will focus on Autonomics and it’s impact on business and IT. Autonomics are intelligent systems that apply self-adapting policies to “learn” from experience and respond to new conditions, with the potential to perform more and more complex tasks.

Autonomics are entering the mainstream in back-office work performing high volumes and routine tasks. It is predicted that it will completely transform the Business Process Outsourcing (BPO) industry. However, the current systems are not “autonomics” in the truest sense but are evolving and will reach that stage in the near future.

Traditionally robots revolutionized the manufacturing industry largely in the context of assembly lines. Now Robotics Process Automation (RPA) is impacting the back office and process related work in the same way. Whereas in manufacturing, physical robots replaced workers doing repetitive tasks, in the office world, software automation ( termed as RPA) is replacing many of the repetitive tasks and associated jobs.

RPA is most effective where:

-          ·     Actions are consistently and steps repeatedly
·         Data is template based and data entered repeatedly in the same fields
·         Applications are rule-based

Many organizations have started to use it effectively across many functions but not limited to:

•          Data entry and validation
•          File and data manipulation
•          Automated formatting
•          Multi-format message creation
•          UI manipulation
•          Web scraping
•          Text mining
•          Uploading and exporting
•          Downloading and importing
•          Workflow acceleration
•          Currency/Exchange rate processing
•          Reconciliations   

Other than the horizontal / generic functions listed above some notable usage has been across specific industry verticals like:

·         Regulatory Compliance for Financial Services – RPA solutions not only address the regulatory compliance, by performing the function in the same way repeatedly but provides a detailed and sustainable audit log of activities – important requirement for compliance. Also the tools can be scaled easily as well as “learn” to perform new processes as they are introduced by regulatory agencies.

·         Mortgage Loan Processing – RPA tools execute routine rules-based tasks and therefore provide increased and accurate loan processing experience. By applying rule-based algorithms RPA tools resolve errors and increase speed through the loan origination systems. Also RPA tools can “learn” to analyze data in the applications and recommend cross-selling of other products to the customers like insurance, savings instruments, etc

·         Telecom Sector – Telecom providers need to switch circuits based on customer movement. However some of the decommissioning work requires verification from multiple systems and third party circuits and sources. Traditionally these have been resource intensive requiring multiple steps and checkpoints. RPA tools are providing increased efficiency as most of this process is rule based.

This is still evolving and with more cognitive and Artificial Intelligence built in, the RPA tools are becoming smarter. The impact is felt across many industries not limited to BPO only, not to mention the impact on jobs and change of roles and skills.

The robots have arrived in “white-collar” jobs!! Humans need to adapt to the new reality and create new jobs and skill sets to work with the robots. Humans have always adapted and though the near term future may have some pain, in the long term it will benefit all in moving away from repetitive jobs.

As the saying goes "Change is the only constant!!!"

Intelligent Automation – coming of age

By 2019, the global market for content analytics, discovery and cognitive systems software is projected to reach $9.2 billion, according to IDC, more than double that of 2014.

Intelligent automation is rapidly coming of age. “Smart” machines and “smart” systems and “smart” bots are becoming mainstream.Intelligent automation which is a combination of Artificial Intelligence (AI) and automation is mainstream now. It is helping businesses to achieve higher levels of efficiencies. The range of applications could be from collecting simple data to making contextual decisions to guiding autonomous vehicles.

Intelligent Automation broadly covers Machine Learning, Autonomics, Machine / Computer Vision and Natural Language Processing.

Machine Learning – refers to the ability of systems to improve their performance by exposure to data without explicit programs or instructions. It is the ability to automatically discover patterns in data and carry out predictions. These applications can potentially improve performance through systems that generate lot of data and over time. Typical mainstream usages of Machine Learning systems are in fraud detection, sales forecasting, Oil and Gas Explorations and Public Health Management (predicting and containing outbreaks)

Autonomics – refers to systems that are designed to perform routine tasks and processes by humans. The technology interfaces with existing applications to process transactions and trigger responses. The system typically goes through two phases – Learning and Executing Phases. The machine-learning software programs ‘observe’ how a trained user takes decisions or resolve issues and replicates the same ‘decision making’ process. Autonomics are entering the mainstream in back-office work performing high volumes and routine tasks. It is predicted that it will completely transform the Business Process Outsourcing (BPO) industry.

Machine / Computer Vision – refers the ability of machines or computers to identify objects, scenes, activities as images. The sequence of image processing leads to break down the observations to smaller tasks analyze and decide. These applications have become mainstream most famously through Facebook – face recognition software. The mainstream usages are in security area and fraud detection activities. Identifying forged bank notes or criminals has gone mainstream with these technologies.

Natural Language Processing (NLP) – refers to the ability of computers to interpret human language in the proper context to take appropriate actions. The mainstream application is most popular through application like Siri offered on iPhone / iPad devices. Dictionary usages, uses in Museums as well are more query response based. Translation and internationalization are also catching up.

The applications of intelligent automation are already coming of age and mainstream in our daily lives. We are interacting with more intelligent systems that are combining all the above intelligent platforms.

Advances in artificial intelligence, robotics and automation are becoming important for companies in all sector to understand the impact and adopt intelligent automation or risk falling behind.

I will try and cover that in my next blog on autonomics and its impact.

IoT impact on Financial Technology Sector – Will customer experience win over “brand value”?

Projections

Gartner, Inc. forecasts that 6.4 billion connected things will be in use worldwide in 2016, up 30 percent from 2015, and will reach 20.8 billion by 2020. In 2016, 5.5 million new things will get connected every day.

Gartner estimates that the Internet of Things (IoT) will support total services spending of $235 billion in 2016, up 22 percent from 2015. Services are dominated by the professional category (in which businesses contract with external providers in order to design, install and operate IoT systems), however connectivity services (through communications service providers) and consumer services will grow at a faster pace.

Implications

IoT services will become the real drivers and value add. Service providers and vendors which will provide integration to third party applications will become the critical part in the value chain. Those service providers that provide the best value in terms of customer experience will win market share.

Customer experience vs brand value?

The financial sector is heavily dependent on exchange of “data” on a large scale for normal operations. IoT by it’s nature itself will increase it many times more. It is therefore imperative that like manufacturing, retail, energy, transportation, etc, financial sector will be disrupted in a major way by this new “technology revolution”.

Retail banking experience is the obvious choice. How can retail banks make the ATM experience more engaging? Can the smartwatch and smart- wallets be connected to provide an enhanced experience? Walking into an ATM or bank can be a different customized experience for each customer based on his needs (Like many retail stores). One need not slot in the debit card in the ATM, proximity sensors or authenticated messages from my smart watch or wallet can authenticate and dispense the required services.

Data mined from various IoT sources can provide customized experience to the end user. Walking into a car dealership, the connected banks can send provide customized interest rate and contextual offerings on models that I searched online.   

The Mortgage industry can adopt the same customer experience. Real estate agents and builders are already providing VR (Virtual Reality) experiences on the property. Mortgage industry can exploit these date to provide customized loans. With e-documents and e-signatures also being adopted, the experience becomes smoother. The connectivity could move across the whole lifecycle from real estate agents, mortgage providers, movers and interior designers to local authorities and utilities. A mortgage provider providing such a connected experience will hands down against an established brand.

The same connected experience (“Smart Homes”) can be extended to home insurance. Homes with updated fire systems and burglar alarms connected to emergency systems are already being provided with customized home and fire insurances.

Connected cars (cars with telemetry) are already allowing car insurance providers to reward or punish drivers based on their driving habits.

IoT by it’s nature and underlying value makes static objects more engaging by interaction of data. Therefore it is imperative that “customer experience” will overtake brand values and pricing in customer decisions.

Impact of Internet of Things (IoT) on Financial Services

Internet of Things (IoT) is having a huge impact on business models and systems around the world. IoT in simple terms can be explained as devices that have been given the ability to collect data and communicate with each other. It implies that devices can collect and transmit the data they capture. This means that insights can be obtained at granular level to create specific inputs or analyzed for a “larger picture” effect.

Data available in public domain from analysts and industry research indicate an exponential growth in such interconnected systems and revenue impact of the same:

•          Cisco estimates the IoT market to be $19 Trillion
•          McKinsey Global Institute expects the IoT will deliver revenues of $6.2 Trillion by 2025

The financial services is largely impacted by IoT. The impact across different financial services sectors as per industry findings are shown below:

  

The highest impact is seen in insurance, followed by commercial real estate and banking. With more wearables, connected cars and connected healthcare, insurance sector is the biggest benefactor. However the impact is all across. The recent tie-up between Samsung and MasterCard is a good example of how it can help in banking and retail. As an example, based on the data shared by your Samsung refrigerator or Samsung washing machine, it may be time to replace / repair. These data can then allow MasterCard to send you personalized offerings on extending credit for a purchase based on your portfolio and lifestyle.

In insurance it is more obvious, from your lifestyle to driving habits, your insurance offer can be suited to your behavior and habits.

Some of the key impacts that financial services industry would need to consider would be around some of these key issues:

1.      

•       Identity Management  – With spread of devices across home and offices it would to identify the users. Same device may be used by multiple users, like a car or treadmill. Identifying the right user will be challenge and traditional forms of identification may not work.
•              Privacy – In line with identity management will be the challenge to manage data privacy. The data is collected across a whole range of device will create own sets of risk. This will call for new policies and processes around data privacy and there may be still many unknowns in this area.
•           Security – Tied to the above two aspects are security policies and mechanism. Data shared over multiple devices and medium are prone to be hacked or manipulated. This can impact the end user services. There needs to be standards developed and agreed for these. Also the question will be who is liable for or pays for which part of the data security domain. Is the Bank or insurance company liable for data leakages inside my home or from my car?

Other than the above critical impacts, issues of inter-operability standards, reliability and collaboration between devices and their impacts on services will be an important consideration. The technical standards may be easy to resolve or address, the challenge will be to determine the contextual relevance of the data. Which in turn means how much of intelligence resides on the device and how much on a central system?

Though the proliferation of IoT devices is without doubt in the financial sector, it would seem that the impact has not yet been assessed. The systems and models are likely to evolve along with the requirement, but the speed of change will be very quick. Those who start early will benefit.

Technology Impacts on Financial Services Industry

Financial services sector has been mostly impervious to radical technical and business model changes. They have been able to maintain a relatively stable but profitable business models over the last few decades. Traditional business are now under siege from a whole host of innovators and technology changes that are forcing a re-think on the business models of traditional financial services sector.

According to the World Economic Forum reports the impact is felt across all sectors of the financial services industry.

Courtesy: WEF Report

According to the findings today’s innovators are different from earlier disruptors in this sector for the following reasons:

1.       Today’s innovators are targeting the intersection of highly profitable business and customer’s area of frustrations and pain. Case being example International Money transfers. I have personally experienced it first-hand. In UK, high street banks charged from GBP 17, if done at bank to GBP 12 if done online for International Bank transfers to India and took 4 -5 business days to credit the account in India. In came innovators like Money2India and the same could be done at a fraction of the cost less than GBP 5 per transfer and credited in 1-2 business days to the account in India. This was a huge loss of such profitable business by high street banks to such innovators and the benefits to the customers.

2.  The innovators are also using their technical skills to automate manual processes that are currently very resource intensive. “Robo-advisors” likes of Wealthfront, FutureAdvisor and Nutmeg have automated a full suite of wealth management services including asset allocation, investment advice and even complicated tax minimization strategies, all offered to customers via an online portal. This allows them to offer services to a whole new groups of customers that were once reserved for the elite. You do not need a six figure asset pool to be eligible for such services .As a result, a whole new class of younger, less wealthy individuals are receiving advice and support.

3.   Use of Data and Analytics strategically has been one of the key innovations of the new entrants to banking and insurance. Traditionally Bankers would look at credit scores and insurance providers look at health record or driving records. However, as our devices and social lives are getting more entwined, the innovators are mining the data across devices and social media to provide customized services. Some innovative insurers are providing fitness bands to customers and based on whether you have been hitting the couch or the gym regularly you have option of reducing your insurance premiums. These sort of innovations have added a whole new set of customers. With connected cars and more wearables and social connections, customized products will become the norm.

4.   Inspired by companies like Uber and Airbnb, these innovators have learned to exploit the platform based capital light models to grow revenues exponentially and keep costs nearly flat. The growth of companies like Prosper and Lending Club are such examples having crossed Billion dollars in origination transactions. Without putting their own capital at risk, they have provided a market place for lenders and borrowers to meet and avail the best rates. Similar has been the disruptive effort of crowdfunding platforms that have helped start-up many new businesses that would otherwise been not considered for funding by traditional banks and institutions.

5.   As part of the growth strategy these innovators are co-operating with incumbents in some areas and competing in some areas. They are quick to take advantage of the scale and reach of these companies and for traditional companies it is an easier channel to new markets. Like ApplePay, is not competing with Visa and MasterCard but working with them on the payment networks. Same is evident in India with innovators like paytm, oxigen, etc tying up with traditional network and co-operating as a strategy to increase their reach and growth.

The innovations and these changes can only prove beneficial to end users in terms of better rates, efficient service and customized attention from the providers.

Will Blockchain Technology Transform Payment Transactions and Security?

Blockchain is a method of recording data - a digital ledger of transactions, agreements, contracts - anything that needs to be independently recorded and verified as having happened.

The big difference is that this ledger isn't stored in one place, it's distributed across several, hundreds or even thousands of computers around the world. And everyone in the network can have access to an up-to-date version of the ledger, so it's very transparent.

How it works?

For a simple explanation visit this link : http://www.coindesk.com/bitcoin-explained-five-year-old/

A rough idea of what a block chain may look like, courtesy of Yevgeniy Brikman

Security?

Once updated, the ledger cannot be altered or tampered with, only added to, and it is updated for everyone in the network at the same time. The distributed nature of the blockchain database makes it hard for hackers to manipulate. They need to access every copy simultaneously to have a successful hack.

The encryption process is carried out by different computers and if all computers on the node agree then only the digital signature is added to the block. It is a one way process, any change will result in a different signature.

Benefits?

-         

•     Faster and secure payment transactions for users. There is no need for any clearing houses, all transactions happen online digitally and instantly. Banks save on fees paid to clearing houses.
•        The same policies can be used in trading of gems and diamonds (blood diamonds) so only non-conflict gems are traded with verified records.
•           Keyless Signature Infrastructure to help secure citizen data by government. In India, it can be a boon for the whole Adhaar database and transactions thereof.  
• 
  

Though it is not yet understood fully and still evolving, the impact on our ways of life are likely be profound.

Disruption Trends

“The only constant is change”

                We are going through an age of unprecedented changes. Changes and disruption has always been at the forefront of human history, but the pace of change and disruption has been accelerating over the past few decades. This is mostly driven by the pervasive digital age which has impacted all aspects of our lives.

                The pace of disruption varies from industry to Industry as different forces and maturity level across industry varies. However, disruptions do not happen overnight. They have been in the making and ignored until the disruptors become the driving force themselves. In IT these have slowly moved from IBM (Mainframe), DEC (Minis), Microsoft (PC), Intel (PC) to Apple, Google, Facebook, Amazons of the internet age. The disruption has not been limited to IT industry it has permeated through to all industries – PayPal, Uber, Netflix, skype, WhatsApp…..the list continues.

The disruption across industries has not been uniform.

(Source: LEF)

Few observations:

•          Banking, Healthcare and Manufacturing are ripe for disruption and are currently facing an accelerating winds of change. Banking is going through a fierce battle between traditional incumbents and new age financial technology companies across –payments, currency, fund transfers, lending, origination and documentations. 3D printing, robotics and smart products are disrupting manufacturing.     

•      In Healthcare, intelligent at-home systems, retail and self-administered healthcare services are challenging the traditional healthcare services.  

•      Insurance has been a laggard but since these are annual or long term business events maybe they do not require such frequent changes.

In conclusion, no industry has undergone a complete disruption yet and we still have traditional business in all sector. But for how long is the question.