Reports of our death are an exaggeration: Difference between revisions

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 As a strategy for coping with “known knowns” automation is good business. Humans are bad at following rules. They are expensive. They occupy real estate. They require human resources departments. They misunderstand. They screw up. They leave. They don't write things down. Machines are much better on all of these measures.
-But, still ''the race to automate “known knowns” is a race to the bottom''. The value in a product is the resources and skill required in producing it. Banking products do not need no fields, raw materials or warehouses: they only require skill. A skill that can be automated can cheaply be replicated. The value of a “skill”, once automated, tends to zero.  The margin it generates will tend to zero, too: everyone with a decent PC will be at it.
+But, still ''the race to automate “known knowns” is a race to the bottom''. The value in a product is the resources and skill required in producing it. Banking products need no fields, raw materials or warehouses: only ''skills''.
+Two types of skills, categorically: ''computational, analytical'' skills and ''interpersonal, imaginative'' skills.
+Computational skills — those suited the symbolic manipulation — can and should be automatic algorithms, high-frequency trading strategies, data analytics, neural networks and machine learning. But the value of computational “skills”, once automated, tends to zero. ''Even those requiring artificial intelligence''. The margins they generate will tend to zero, too: everyone with a decent PC will be at it.
 If Mr. Cryan thinks ''that'' is the future of his business, he needs his head read.
 Your future, sir, is in your people: those ones who stand at the frontier, staring resolutely into the horizon. They may have robots at their disposal, but only your human pioneers can set them to work.
+===Perez’ Folly===
+Not long before departing the ship erstwhile head of UBS Evidence Labs Juan Luis Perez — not himself by background a Banker — was heard to remark that UBS competition was not from start-up challenger banks, but from Apple, Amazon, or Google.
+His argument was this: a bank’s business success is mostly down to three components: its technology stack, its reputation and goodwill, and its regulatory status. Two of these — tech and reputation — are hard, substantial problems, he proposed, while the other — capital and regulatory compliance — is comparatively formalistic, especially if you have a decent technology stack.
+Apple, Amazon, and Google ''wipe the floor with any bank on technology'' — I can go with that — and materially better standing with the public. Who doesn't love Amazon? Who ''does'' love the Chase Manhattan bank?
+So, should the tech giants come for banking, ’’look out''.
+Let’s park a few uncomfortable facts and give Me Perez the benefit of the doubt:
+Firstly, none of Apple, Amazon, or Google as so much as cast a wanton glance in the direction of banking, despite the revenue opportunities dwarfing those in tech. There must be some reason for that.
+Secondly a company that makes cool gadgets has as much change of keeping its branding following a pivot to banking as does it is a toy factory could that moves into dentistry.
+Thirdly it is naive in the extreme to prime that regulatory compliance is formalistic, let alone “the easy bit of banking”.
+Park all that. For what Mr Perez overlooks as a core competence in a successful bank is the same thing Mr Cryan did. Its ''people'". They are the irreducible, ineffable, magic difference. The tech stack can give them wings, but they have to decide where to fly. They narratise.the bond, form networks, make connections, ''persuade''. These things a machine cannot do.
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