Artificial intelligence has the potential to revolutionize banking. ChatGPT offers an early taste of what that might look like. But do client advisors have to worry about their jobs? Teodoro Cocca asks that very question in a piece for finews.first.
It is the buzzword of the moment. AI, or Artificial Intelligence, conjures up visions of a future dominated by the machines of tomorrow. But with all that, it remains very vague and unclear as to how that might impact the banking industry.
A first inkling of what this brave new world might look like is already available for free. ChatGPT. As OpenAI’s latest release, it is currently accessible for research purposes, and it is already making a furor. Software that uses natural conversation to virtually simulate a counterpart, a sparring partner. But it can also draft text or program code based on stylistic inputs.
You can test it out for yourself. Ask what a client has recently ordered or what you as a client advisor have provided as a service. If you are not satisfied with the response, express your discontent, and keep asking.
«Should one buy Credit Suisse shares now?»
Astoundingly, ChatGTP’s artificial intelligence reacts extremely flexibly and makes the textual adaptation necessary. That is what is most surprising about this new version. The interaction between man and machine has made leaps and bounds, likely soon making the linguistic deficiencies inherent in today’s hotline bot-based chat functionalities a thing of the past.
The texts that are generated are smoother and more polished. The tone is much more modulated than had been the case in the past. Exchange with the chatbot allows dialogue to follow an almost human path.
But the intelligent chatbot can’t yet answer direct financial questions that are put to it, as the data sets are not yet installed. It can’t yet provide useful advice. When asked, it refers to questions such as «should one buy Credit Suisse shares now?» to professional investment advisors.
«Many relationship managers are asking themselves whether their jobs will even exist in 10 or 20 years»
But it doesn’t take a great deal of imagination to see the future and guess what potential this technology has. Linking stores of financial data with an institution’s proprietary research could offer new prospects for advisory businesses.
Conceptually, ChatGPT can be seen as an extraordinarily capable digital assistant. All administrative tasks or categorical questions will be easily answerable in the future with such AI-enabled bots, pre-empting the need for advisors to do so.
But it could also go much further than that. Many relationship managers are asking themselves whether their jobs will even exist in 10 or 20 years. Young people at the start of their careers are asking themselves whether banking hasn’t become another form of big tech. One that is devoid of daily human interaction. ChatGPT is exacerbating the fears that personal bank advisory services face extinction.
«It could be a first taste of a new wave of fintech companies»
Powerful chatbots make purely digital solutions more attractive. There is no doubt about that. Interacting with intelligent software that is eloquent and, in the future, even has a certain sense of humor, will help digital client experiences. It will leave the impression of very personalized service with an almost human touch.
Operationally, it will allow far more clients much easier and more intuitive access to proprietary research and specific investment competencies. Pure fintech digital solutions could prompt their transaction-heavy business models to more closely approximate advisory-centered models, raising margins.
Service package offerings for particularly powerful chatbots with specific capabilities (for example, to program and test individual trading strategies) could make digital business models more scalable. It could be a first taste of a new wave of fintech companies offering more sophisticated solutions than is the case currently. It remains to be seen whether there is a mass audience for that.
«Such powerful chatbots could quickly become a commodity»
A client’s willingness to pay for such a service depends on how useful the access to this intelligence is. If bank clients do not see it as particularly valuable, the amount of money they are willing to fork over will quickly trend to near zero.
It would just become a Google search function with a plumped-up question-and-answer interaction module. The economic advantages of monetizing such a chatbot, and any resulting higher margins, will be an extremely large challenge for the financial industry (and without ignoring the inherent legal questions).
Such powerful chatbots could quickly become a commodity even if they do not possess the advantages of providing higher returns (at least expected ones) or other advantages in the investment process. They may end up being heavily used, and expected by clients as a service, while at the same time making no difference to margins in the medium term.
Digital assistants, however, do not have to compete with the classic advisory business. They could instead end up being important instruments that increase productivity in the advisory business. They could take on many administrative and advisory tasks in the future for clients and advisors.
«These factors are deeply psychological and cognitive»
That would mean that advisors would have more time to directly advise clients. In such a scenario, it is feasible that speech-driven chatbots would find a place in meeting rooms and video conferences, helping to answer client questions immediately. With that, it is important to note that asking the right questions is the key intellectual challenge for the financial sector, and where the advisor plays the most important part. Artificial intelligence can assist with financial decision-making by helping to make as many pertinent, relevant facts easier to reach and summarizing them user-friendly.
A decision comprises judgment and weighing of individual facts as well as some kind of determination of probable future developments. Often, a financial decision is made in the context of a specific client situation. It is not a sterile, purely mathematical exercise. Emotional considerations can be just as important to financial decisions. Linking these to AI is not realistic for the foreseeable future.
Current research results show that private clients perceive usefulness and capacity and trust in the technology as the most important factors related to the acceptance of chatbots. The first question will be whether the answers that chatbots provide are seen as useful and as to how much the technology can be trusted.
These factors are deeply psychological and cognitive, and they do not mean a priori that a strong technological solution will replace classic advisory services. Even if that were the case, a banking client would have to be satisfied with the decision that they have made.
It is about the larger psychological context of a decision and how material it is, for example in the higher reaches of the private banking advisory business. Will a machine be able to make a client feel better about the step they are taking? That is and remains an open question.
«I asked ChatGPT to write a passing end to this article»
The most likely scenario is that there is room for both. Clients that have a predilection for independent, tech-based decisions and clients that also use digital tools to collect information but then only want to make any important decisions in the presence of advisors.
I asked ChatGPT to write a passing end to this article. It generated this – astounding – response: «So, if you ever feel like the all-knowing Oracle of Delphi, just give ChatGPT a try, it's the future of banking interaction and who knows, maybe even the future of the banking profession itself. But don't worry, we're still far from ChatGPT teaching us divination.»
Teodoro D. Cocca has been Professor of Asset and Wealth Management at Johannes Kepler University Linz since 2006. Before that, he worked for several years at Citibank in both investment and private banking, conducted research at the Stern School of Business in New York, and taught at the Swiss Banking Institute in Zurich. In addition, the Swiss with Italian roots is an associate professor of private banking at the Swiss Finance Institute (SFI) in Zurich and acts as a consultant for financial companies and public authorities in Switzerland and abroad.
Previous contributions: Rudi Bogni, Peter Kurer, Rolf Banz, Dieter Ruloff, Werner Vogt, Walter Wittmann, Alfred Mettler, Robert Holzach, Craig Murray, David Zollinger, Arthur Bolliger, Beat Kappeler, Chris Rowe, Stefan Gerlach, Marc Lussy, Nuno Fernandes, Richard Egger, Maurice Pedergnana, Marco Bargel, Steve Hanke, Urs Schoettli, Ursula Finsterwald, Stefan Kreuzkamp, Oliver Bussmann, Michael Benz, Albert Steck, Martin Dahinden, Thomas Fedier, Alfred Mettler, Brigitte Strebel, Mirjam Staub-Bisang, Nicolas Roth, Thorsten Polleit, Kim Iskyan, Stephen Dover, Denise Kenyon-Rouvinez, Christian Dreyer, Kinan Khadam-Al-Jame, Robert Hemmi, Anton Affentranger, Yves Mirabaud, Katharina Bart, Frédéric Papp, Hans-Martin Kraus, Gerard Guerdat, Mario Bassi, Stephen Thariyan, Dan Steinbock, Rino Borini, Bert Flossbach, Michael Hasenstab, Guido Schilling, Werner E. Rutsch, Dorte Bech Vizard, Adriano B. Lucatelli, Katharina Bart, Maya Bhandari, Jean Tirole, Hans Jakob Roth, Marco Martinelli, Thomas Sutter, Tom King, Werner Peyer, Thomas Kupfer, Peter Kurer, Arturo Bris, Frederic Papp, James Syme, Dennis Larsen, Bernd Kramer, Armin Jans, Nicolas Roth, Hans Ulrich Jost, Patrick Hunger, Fabrizio Quirighetti, Claire Shaw, Peter Fanconi, Alex Wolf, Dan Steinbock, Patrick Scheurle, Sandro Occhilupo, Will Ballard, Nicholas Yeo, Claude-Alain Margelisch, Jean-François Hirschel, Jens Pongratz, Samuel Gerber, Philipp Weckherlin, Anne Richards, Antoni Trenchev, Benoit Barbereau, Pascal R. Bersier, Shaul Lifshitz, Klaus Breiner, Ana Botín, Martin Gilbert, Jesper Koll, Ingo Rauser, Carlo Capaul, Markus Winkler, Konrad Hummler, Thomas Steinemann, Christina Boeck, Guillaume Compeyron, Miro Zivkovic, Alexander F. Wagner, Eric Heymann, Christoph Sax, Felix Brem, Jochen Moebert, Jacques-Aurélien Marcireau, Ursula Finsterwald, Michel Longhini, Stefan Blum, Zsolt Kohalmi, Karin M. Klossek, Nicolas Ramelet, Søren Bjønness, Gilles Prince, Salman Ahmed, Peter van der Welle, Ken Orchard, Christian Gast, Jeffrey Bohn, Juergen Braunstein, Jeff Voegeli, Fiona Frick, Stefan Schneider, Matthias Hunn, Andreas Vetsch, Fabiana Fedeli, Marionna Wegenstein, Kim Fournais, Carole Millet, Swetha Ramachandran, Thomas Stucki, Neil Shearing, Tom Naratil, Oliver Berger, Robert Sharps, Tobias Mueller, Florian Wicki, Jean Keller, Niels Lan Doky, Karin M. Klossek, Johnny El Hachem, Judith Basad, Katharina Bart, Thorsten Polleit, Bernardo Brunschwiler, Peter Schmid, Karam Hinduja, Zsolt Kohalmi, Raphaël Surber, Santosh Brivio, Mark Urquhart, Olivier Kessler, Bruno Capone, Peter Hody, Florin Baeriswyl, Michael Bornhaeusser, Agnieszka Walorska, Thomas Mueller, Ebrahim Attarzadeh, Marcel Hostettler, Hui Zhang, Michael Bornhaeusser, Reto Jauch, Angela Agostini, Guy de Blonay, Tatjana Greil Castro, Jean-Baptiste Berthon, Marc Saint John Webb, Dietrich Goenemeyer, Mobeen Tahir, Didier Saint-Georges, Serge Tabachnik, Vega Ibanez, David Folkerts-Landau, Andreas Ita, Michael Welti, Mihkel Vitsur, Fabrizio Pagani, Roman Balzan, Todd Saligman, Christian Kaelin, Stuart Dunbar, Carina Schaurte, Birte Orth-Freese, Gun Woo, Lamara von Albertini, Philip Adler, Ramon Vogt, Andrea Hoffmann, Niccolò Garzelli, Darren Williams, Benjamin Böhner, Mike Judith, Jared Cook, Henk Grootveld, Roman Gaus, Nicolas Faller, Anna Stünzi, Thomas Höhne-Sparborth, Fabrizio Pagani, Guy de Blonay, Jan Boudewijns, Beat Wittmann, Sean Hagerty, Alina Donets, Sébastien Galy, Roman von Ah, Fernando Fernández, Georg von Wyss, Stefan Bannwart, Andreas Britt, Frédéric Leroux, Nick Platjouw, Rolando Grandi, Philipp Kaupke, Gérard Piasko, Brad Slingerlend, Dieter Wermuth, Grégoire Bordier, Thomas Signer, Brigitte Kaps, Gianluca Gerosa, Christine Houston, Manuel Romera Robles, Fabian Käslin, Claudia Kraaz, Marco Huwiler, Lukas Zihlmann, Nadège Lesueur-Pène, Sherif Mamdouh, Harald Preissler, Taimur Hyat, Philipp Cottier, Andreas Herrmann, Camille Vial, Marcus Hüttinger, Ralph Ebert, Serge Beck, Teodoro Cocca, Alannah Beer, Stéphane Monier, Ashley Simmons, Lars Jaeger, Ha Duong, Claude Baumann, Andrew Isbester, and Shanna Strauss-Frank.
