The growth of artificial intelligence (AI) and machine learning has taken the world by storm. Machines are now capable of completing complex tasks that only humans could perform in the past. While this sounds great and exiting, it does have a number of implications when it comes to employment issues. This is very true for the financial services industry where brokers and advisers are waiting in anticipation to see what impact AI will have on the future of the industry.
Emerging market blueprint
In a presentation at the Financial Advisory and Intermediary Services (FAIS) Conference, Farzana Badat – Head of Insurance Compliance at the Financial Sector Conduct Authority (FSCA) – pointed out that there has been employment growth along with investment in AI and machine learning.
"Digitisation helps to create efficiencies, optimise business processes and reduce friction in the customer experience. However, digitisation will never be fully able to replace human intelligence, creativity, innovation and empathy. Further, digitisation will and should be used to replace many administratively burdensome and repetitive tasks; however, digitisation should not be seen as a threat to human jobs but rather as an opportunity to enhance current competencies and create new competencies for the workforce," said Badat.
There has been a lot of investment in technology in many markets around the world. However, if we want to look at the possible impact of technology, we need to compare South Africa with a fellow emerging economy.
Badat added that China invests more in workplace automation than any other country in the world. But China also continues to have the largest growing workforce. Automation is used to replace workers who perform repetitive processing tasks and these workers are instead upskilled and redeployed to more creative, value adding roles.
Developed market examples
While it may be a bit unfair to compare our development with that of developed markets. It is still interesting to see how other countries grow their workforce along side AI.
In Denmark and Sweden, by focusing on creating new workplace competencies to ensure the continued relevance and longevity of businesses, only 9% of jobs have been identified as being at risk of being replaced completely. “In fact, the human skills required for success in the digital world of work will result in approximately 1,8 new jobs being created for every 1 job lost,” pointed out Badat.
Early integration of AI into the schooling system is another coping mechanism that is being used around the world. The Finnish education system has the shortest school days in the world but students consistently rank as top performers globally. Average instruction hours are less than 4 hours per day. Focus is rather placed on experiential learning projects, interconnectedness of subjects, immersion experiences such as visiting a supermarket or creating budgets for numeracy skills, visiting farms, orchards or zoos to understand concepts related to the subject matter.
There is no doubt that technology can have a positive influence on the financial services industry if it is used in conjunction with the intermediated advice model.
This is particularly pertinent in Africa if brokers and advisers consider the challenges that the continent faces. Badat pointed out that Africa is the continent in the world that has the highest population without bank accounts and is severely underserviced when it comes to the financial services industry.
"There needs to be an increased focus on economic growth and increasing the consumers need for sustainable financial solutions beyond banking. There are opportunities for innovation to be used as an enabler for inclusion by creating financial wellness ecosystems appropriate and unique to the continent," said Badat.
The African story
Statistics show that the continent is primed for technological growth. Over 85% of Africa’s population has a mobile phone; further, over $5 billion in mobile money transactions are done in Sub Saharan Africa on a monthly basis. In addition, over 50% of Africans are under the age of 20 and have high adoption rates when it comes to new technology.
Yet, further research shows that only 20% of the continent has access to traditional financial services.
Yes, technology can be used to increase participation in the financial services industry in the early stages. However, when clients face complex issues, they will need to speak to a broker or an adviser. This has been proven to be the case in developed markets such as the UK where technology is used in the early stages of an insurance product or for simple products. As the products become more complex, a broker or an adviser is called in.
Insurers need to find a way to transform the technology battle ground to common ground where brokers and advisers can grow and show their value to a new breed of client. There clearly is value in both models, the secret is how to integrate them. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts firstname.lastname@example.org.
Article published courtesy of FANews. Original article can be accessed at https://www.fanews.co.za/article/talked-about-features/25/straight-talk/1146/can-common-ground-be-found-between-technology-and-the-intermediated-insurance-model/24440