The future of finance doesnt involve a killer app or
an entirely new vision for banking and investment management.
Instead, the industry is being revamped by what firms can do
with data and how their daily work will be done by far
fewer people as a result, according to financial
Credit Suisse is now piloting a robot named Reggie, a
virtual assistant not unlike Amazons Alexa. Credit
Suisses Reggie was programmed to answer regulatory
questions, according to Brian Chin, CEO of global markets for
the investment bank. Chin, who spoke on a panel at the Milken
Institute Global Conference in Los Angeles on Tuesday, expects
that the Swiss bank will be able to ultimately cut the number
of calls to its call center by 50 percent. But at this
point, Reggie is better at providing information for simple
questions than appropriately addressing more complex
Chin insisted that people will be redeployed from processing
jobs to technology and servicing private bank and other clients
who will continue to want to talk to human beings. Reggie is
one of more than 20 robots operating at Credit Suisse. Chin
added that the bank has also formed a partnership with data
firm Palantir. With Palantir, Credit Suisse is using data to
identify rogue traders and other compliance problems. If
we can get this right, we can run a more compliant
business, says Chin.
The technology exists now to streamline labor-intensive
processes such as loan underwriting. Mike Cagney, CEO and
co-founder of SoFi, an online consumer lender, uses five pieces
of data to provide instantaneous loan decisions. SoFi is now
moving to use non-traditional information for underwriting,
including data from cell phones, which it thinks will predict
consumers future behavior. Cagney said banks could shed
thousands of people if they used similar technology.
Meanwhile, the asset management industry is embracing
quantitative techniques. Last month,
BlackRock said it was merging some quant funds with similar
actively managed funds and firing some of its portfolio
But Credit Suisses Chin thinks the investment
management industry has a way to go when it comes to data
innovation. The increase in the use of data by investors has
made divergent opinions about securities and the markets
scarce. Thats because many money managers and investors
are using data in much the same way, leading to crowded trades.
Chin compares the next stage of innovation in data in asset
management to the popular Waze App. When the app detects a
traffic jam on one route, it directs users to take one
alternate path. But then that alternative route gets equally
crowded. Somebody needs to invent a third option,
said Chin. In money management, that means firms need to use
data in more innovative ways that will lead to investors with a
range of opinions again.
Not everybody sees a dire future for the labor force.
WorldQuant, a quantitative hedge fund firm with more than 600
employees, is hiring. WorldQuant has 120 employees with
Ph.D.s located around the world. It wants people with
diverse backgrounds who can look at data in new ways to find
so-called alphas, or trading signals, as the firm defines them.
Speaking on the same panel, Igor Tulchinsky, founder and CEO of
WorldQuant, said, More people make more alphas and more
alphas mean more profits.
SoFis Cagney agreed. He says one of the companys
experiments has been so successful that its become
permanent. Right before SoFi sends money to approved borrowers,
an employee calls the customer to ask, Will you pay us
back? That simple phone call has significantly improved
the companys payback statistics. Clearly, humans are not