Is the robo-adviser revolution a challenge to new Luddites?

29 Nov 201652 Shares

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The proliferation of robo-advisers throughout business has gone unnoticed by some. Malcolm Craig, senior manager at PwC financial services advisory consulting, thinks that should change soon.

Robo-advisors

Waves of innovation have always shaped the way households, businesses and societies operate and interact. Technological progress has also been the key driver of rising standards of living, particularly since the Industrial Revolution.

However, with this innovation, comes fear of the unknown and the potential societal impact that it might have.

The cotton and woollen mill workers in the early 19th century reacted to the pace of technological change by smashing machines that they perceived as threats to their livelihood and income.

They became known as the Luddites, apparently after their leader Ned Ludd, a machine-smashing youth of the time. The fear we feel today with regard to robotics is no different to Ludd’s worries some 200 years ago.

The term robotics has a broad number of meanings, with the most popular being manifested by a humanoid computer that offers to get you a cup of coffee, or adjust a room’s lighting and music to your preferences.

Robo-advisors

Removing human intermediaries

While that exists (see Honda’s Asimo for example), the impact of robotics is more present than we realise. Robotics, from a process perspective, is simply an integration layer between normal applications and their end users, removing the usual human intermediary.

Fully automated processes or robotics manipulate existing applications software in the same way that a person works with those systems. These systems may be a help desk application, a customer relationship management system or a point-of-sale terminal in a supermarket.

A self-service checkout is simply a robotic layer applied to a standard application that performs the tasks previously performed by a checkout attendant.

Robo Advisors

Based on this, we should consider the opportunity for improving operational efficiency within the workplace by use of robotic process automation.  As we work with our clients, we are seeing an increased use of robotics under a number of key themes:

  • Technical configurations that automate manual, repeatable tasks
  • Algorithms that solve specific problems such as in the areas of robo-advice for investments
  • Workflow enabled interaction such as with automated chat help desk interfaces

Benefits to be had

We can all look at our business operating models and see at least one of these elements that may benefit from the use of robotics and increased automation.

Businesses are adapting these new models for a variety of reasons. Operational efficiency is the most obvious, as the implementation of robotics can mean that a company no longer needs to use a third-party outsourcer who may be offshore.

A localised robotics implementation drives down the company’s data privacy risk, as proprietary data can be kept in house.

Robotics can also provide a superior service to your customers, as waiting time for engagement can be reduced to near zero and repetitive requests can be resolved quickly and efficiently.

They are also available 24/7, thereby enhancing customer service. Robotics is easily scalable, allowing a business to manage spikes in demand and unexpected growth with ease.

The increased use of robotics is inevitable, and estimates vary as to the speed at which this will occur.

How to measure

There are two approaches to estimates: the first being the numbers of robots in use, and the second being the number of jobs displaced.

In 2005, there were approximately 1m industrial robots in the world. Today there are 1.8m, and the International Federation of Robotics project [says] that there will be 2.6m by 2019.

A Frey and Osborne report created in conjunction with the Oxford University Engineering Sciences Department suggested that 47pc of US jobs could be at high risk from technological progress over the next two decades.

Alternately, the OECD suggests that only 9pc of jobs would fall into this category if you look in more detail at the multiple tasks required for these jobs.

Businesses need to consider the impact of robotics on their operations and the opportunity that they provide. It is important to ensure that your business is not left at an operational expense disadvantage, as competitors steal a march in this area.

For the working population who fear the impact of robotics and are considering the actions of Ned Ludd, it should be remembered that improvements in technology drive job creation in a number of areas.

Also, improvements in operational efficiency typically drive productivity figures by improving the competitiveness of our country.

Gordon Hunt is senior communications and context executive at NDRC. He previously worked as a journalist with Silicon Republic.

editorial@siliconrepublic.com