The technology sector endlessly sets itself up to disappoint us by over-promising and under-delivering. Each new technological wave is presented as hugely transformative of society and yet these transformations are always slow to happen. Bill Gates’s famous quote that “we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten” still holds good and sums up nicely why technology transformation both disappoints in the short-term yet is the viewpoint of a financial service awesome in hindsight.
Take the smartphone, for example. When first introduced, the early-stage fans were falling over themselves to agree with the manufacturers that soon we would all be controlling our lives via the handset. However, this viewpoint was not held by the majority of the population, who felt that a phone which also allowed you to have email and take pictures was a pretty useful gadget but that’s as far as it went.
A decade later, and it turns out that the techno early adopters were , if anything, far too conservative in their forecasts. Who would have guessed that by 2020, we would have lots of pensioners banking by phone and the majority of the US public receiving their news via social media on hand-held devices? And yet that is where we are today, with the majority of the population using their smartphones to manage their day-to-day finances, get their news, make videos and pictures and organise their personal lives on social media. This is without mentioning the billions of business emails being sent and huge amounts of goods being bought online every day. We have got to the point where the actual function of making a phone call is low down on the list of reasons to buy a phone.
What’s up next?
So, what does the future hold in terms of the next technology to fundamentally alter how we run our lives? New forecasts are endlessly pouring out from the techno-nerd contingent: forecasting the complete disruption of our lifestyle at any moment by the arrival of technology with independent agency – robots in the vernacular – promising a Downton Abbey lifestyle to the masses.
While it is far-fetched to imagine that we are about to have a complete domestic service of automatons any-time soon, it is nevertheless true that home-automation is proceeding at a rapid rate; Lights, security, heating and to some extent house-cleaning are now being controlled by many people from their phone whilst they are busy elsewhere.
One of the issues, however, is the complexity of programming all these features and devices via the phone for the masses who don’t wish to have to learn how to do this. Many good technologies have previously suffered from having difficult interfaces – one only has to look at how few features were used on VCRs in the 1990s because of the complexity of the interface.
To simplify this, a key innovation has been the increasing use of voice commands to control devices around the home - this is a real breakthrough as it frees people from the need to programme them by replacing the app interfaces with the simplest interface of them all – the spoken word.
The arrival of voice-controlled PDAs certainly heralds major changes ahead. Of course, the range of what can be achieved is still quite low. Alexa may dim your lights or select the correct TV channel for you, but she still cannot bring a cup of tea into you whilst you are watching telly or go sort out your laundry.
But it is where the impact of voice technology will lead us in the medium term that is of most interest, particularly in the field of financial services. To forecast where we will be in 10 years’ time, it is worth looking at how websites evolved and see if there are similarities that might give us an idea how voice technology will be used in the future.
The first websites rolled out by financial service providers were completely static, unidirectional broadcasters. The sites contained information about the firm that the firm decided was useful and presented it in a way that made sense to them. For financial firms, this was quite a problematic stage, as presenting information to consumers, who are not necessarily knowledgeable about the complexity of financial products and services, is very difficult in the absence of feedback.
At least a financial adviser can sense when the information he is giving is not understood and can tailor his presentation to the ability of the client to absorb it. The first wave of websites had no such ability and presented information using the classic “one-size-fits-all” method, a method that doesn’t really work for any industry.
Clearly, this approach was of limited use and didn’t garner the kind of results that had been hoped for. Websites then evolved to start receiving responses and queries from the user and to tailor the information displayed to the users' needs. This was better but it still resulted in the consumer having to contact the company and interact with an employee in order to buy a financial product or service.
The next wave was more transformative in that it allowed the consumer to actually drive the transaction themselves. This involved a high level of security procedures, time-consuming on the desktop or laptop but entirely necessary to ensure the authority of the user to actually make the changes that were being decided upon. This model was primarily focused on simpler transactions, but at least had the benefit of being far more under the control of the user and only involved corporate staff when something went wrong.
However, it is still a bit clunky and is not really a virtual replication of a real-world process. It requires the consumer to have a level of knowledge that doesn’t really reflect how things are done in the face-to-face world - where the consumer is guided through the purchase by the questions of the person selling the product and who ensures that the key questions are asked in order to get the right solution for the user. It works perfectly well for those who are used to computer interfaces and financial services, but it can be daunting for those who don’t have that basic knowledge.
And then there was voice. Voice assistants such as Siri, Alexa and Google are already in place in many homes and are carrying out relatively static operations. The interactivity level is low. For instance, you can tell your voice assistant to open the skylights and it will obey; it won’t advise you that maybe you shouldn’t because rain is due shortly, even though it has access to that information.
They also are portals to huge amounts of information, similar to the original websites, but a certain amount of knowledge is required by the user as Voice assistants have extremely limited ability to interact in order to refine your request and establish your actual needs. Without this ability, the process follows the old garbage in - garbage out scenario; if you haven’t asked your question carefully enough then the assistant may give out information that is correct, but not what you wanted as it will work from what you’ve actually said rather than what you meant.
However, just as websites became more interactive and therefore more useful, the potential is there for the voice technology to go the same way. Ongoing learning across all the assistants based on usage and feedback will take time, but as the knowledge base grows, the system will be far more intuitive and better able to provide the assistance required. Of course, the speed at which the artificial intelligence behind the systems improves will depend on the number of users, but this is a technology which is getting adopted fast.
One of the key benefits of voice-driven automation is the fact that it doesn’t require knowledge of how to use computers as the system is based on speech. This means the take up rate is quite high amongst the young, which you would expect, and also among the elderly, who quickly adapt to using it in preference to navigating computer interfaces using a mouse and keyboard. They were raised to communicate vocally and therefore this technology doesn’t have the barrier that using websites and apps sometimes have for older people.
Voice removes barriers
From the viewpoint of a financial service, voice technology is the one we have been waiting for. Trying to simplify the work of a financial adviser is extremely difficult given the sheer volume of information involved. Getting the end-user to input that much information is challenging; technophiles who love the idea of being able to access their financial advice easily, at a time and place of their own choosing relish the idea and accept the need to put in the effort of entering all the data.
The rest of the population may find the prospect daunting. They are far more comfortable with the traditional approach of an adviser questioning them and teasing the key information from them as part of the process of doing a complete financial review.
The trouble is that this is one of the most expensive ways of delivering financial advice and therefore it is not feasible for it to happen regularly enough to ensure that the user really stays on top of their long-term finances. For HNW individuals, the cost-benefit of regular financial advice sessions is positive but for the rest of the population, the cost would far outweigh any benefit received and would actually become a drain on their wealth.
Chatting with robots
Voice technology, when it is advanced enough, will ensure a more human interface to robo-advice systems and this will encourage mass adoption, particularly if the voice assistant is linked to their TV to give visual displays as it talks to them. Voice assistants will soon be good enough to help people through the huge amounts of data capture required for a full financial review or to provide them with an assessment of the available products based on the needs of the customers picked up during a conversation with them.
That word, conversation, is ultimately the key issue. Voice assistants currently do not have the capacity to have anything like a real conversation, merely a series of staged responses which poorly mimic the way a real conversation goes. However, the more they are used, the better the systems will get at providing real-time conversation and this will enable them to deliver financial advice and services in a regulated and unbiased way, but at a much lower cost.
The very wealthy can afford advisers whom they can meet regularly and who also put in the time to monitor the portfolio and initiate action when required. Robo-advisers are moving to the same point, but it is the evolution and addition of voice technology, that will bring them to the mass market.
Whilst this journey won’t be complete in the next 24 months, inexorably, things are moving in this direction. And in 10 years’ time, we may well be looking back at keyboards and wondering why anyone would use such things which inhibit interaction rather than speed it up.