The success of self-driving vehicles has significant implications for any industry where technology can replace human interaction. At the end of May, online search giant Google (whose stated mission is “to organize the world’s information and make it universally accessible and useful”) announced its efforts to build a new car prototype, designed to be fully autonomous—a model with no steering wheel, no pedals and no human driver. Imagine if the same were created for banking…
In the early days of the automobile, you needed an “expert” to take charge of the controls. Henry Ford’s Model T, which started rolling off production lines in 1908, is widely recognised as making automobiles affordable to the middle class. While sales of cars quickly picked up, in the early days there was little choice available in type of model, and new owners had to learn how to drive it themselves. Where initially access to wheels meant a competitive advantage (i.e., the guy with the cool car would get the girl; the fastest stagecoach would get the most business—as was a source of Wells Fargo’s early success), over time anyone could gain access, and being able to drive became a requirement for many jobs or family needs.
Fast forward to today, and we find driverless vehicles can not only cut down on expenses but potentially produce better results – around the world unmanned trains and people movers exist that always run on time, never go on strike and drastically reduce exposure to human error and impairment. With Google’s ongoing autonomous car experiments, we can see the technical know-how of getting from A to B is being transferred to on-board computing. In the process, car owners can regain valuable time while improving their potential safety record and extending their potential usage of the vehicle (e.g., into their elder years when eyesight and hearing have failed).
As I explore the progress being made in this dimension, I see many parallels that can be drawn with the banking industry. From the early days of relationship banking to self-directed online banking, I can envisage a future banking model that would eliminate typical human banker roles in favor of an autonomous banking service. The customer could set their financial objectives at the outset, and the banking system would then calculate the monthly budget available, set out what investments it plans to make on the customer’s behalf and make relevant payments.
True bankers’ roles would evolve to focus on creating different user profiles and designing the various products that could be made available for each. Just as an automated car cannot exceed the speed limits, an automated banking service would not permit expenses outside of preset budget limits. Bankers would be available, for an additional charge, for those desiring a more high-touch banking experience.
The technology for an automated vehicle exists today, and so does the capability for automated banking. Many individuals might at first be reluctant to enter a car with no steering wheel. In the same manner, I can imagine initial reluctance to give control over my finances to a virtual banker. Yet under the right set of conditions, the benefits could outweigh the risks for a large number of customers. It is only a matter of time before digital innovations lead to fully virtual automated banking.