James Bessen

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“AI Will ‘Revolutionize’ The Way In Which Banks Interact With Their Clients”

March 30, 2017 in Excerpts, Politics, Science/Tech | Permalink

When debating whether we’re on the verge of a revolution in automation that might displace too many workers in too brief a time, those sanguine on the topic invariably introduce bank tellers into the argument as proof that machines which would appear to kill jobs actually create more of them. The “Automation Paradox” it’s called.

There are two major problems with this theory which I’ll get to after an excerpt from James Bessen’s 2016 Atlantic article on the topic:

Robot panic is in full swing.

But these fears are misplaced—what’s happening with automation is not so simple or obvious. It turns out that workers will have greater employment opportunities if their occupation undergoes some degree of computer automation. As long as they can learn to use the new tools, automation will be their friend.

Take the legal industry as an example. Computers are taking over some of the work of lawyers and paralegals, and they’re doing a better job of it. For over a decade, computers have been used to sort through corporate documents to find those that are relevant to lawsuits. This process—called “discovery” in the profession—can run up millions of dollars in legal bills, but electronic methods can erase the vast majority of those costs. Moreover, the computers are often more accurate than humans: In one study, software correctly found 95 percent of the relevant documents, while humans identified only 51 percent.

But, perhaps surprisingly, electronic discovery software has not thrown paralegals and lawyers into unemployment lines. In fact, employment for paralegals and lawyers has grown robustly. While electronic discovery software has become a billion-dollar business since the late 1990s, jobs for paralegals and legal-support workers actually grew faster than the labor force as a whole, adding over 50,000 jobs since 2000, according to data from the U.S. Census Bureau. The number of lawyers increased by a quarter of a million.

Something similar happened when ATMs automated the tasks of bank tellers and when barcode scanners automated the work of cashiers: Rather than contributing to unemployment, the number of workers in these occupations grew. 

Okay, the two problems: 1) One is that bank tellers handle many functions beyond just dispensing money, so the ATM technology has been more an add-on convenience than a replacement. As AI improves and makes smart machines more flexible, they’ll nudge aside their human counterparts. 2) Just because a class of worker isn’t immediately elbowed aside by robotics doesn’t mean there’s a permanent detente. Emergent automobiles shared the roads with horses for decades before the animals were driven away. We’ll be employed to work alongside robots, in tandem with them, until we’re no longer employed that way. That day will come for almost all positions; it’s just a matter of how quickly.

A Reuters piece by Jemima Kelly suggests that reckoning will arrive in a handful of years for bank tellers and customer-service people. Give or take, that’s probably so. An excerpt:

LONDON (Reuters) – Artificial intelligence (AI) will become the primary way banks interact with their customers within the next three years, according to three quarters of bankers surveyed by consultancy Accenture in a new report.

Four in five bankers believe AI will “revolutionise” the way in which banks gather information as well as how they interact with their clients, said the Accenture Banking Technology Vision 2017 report, which surveyed more than 600 top bankers and also consulted tech industry experts and academics.

Artificial intelligence — the technology behind driverless cars, drones and voice-recognition software — is seen by the financial world as a key technology which, along with other “fintech” innovations such as blockchain, will change the face of banking in the coming years.

More than three quarters of respondents to the survey believed that AI would enable more simple user interfaces, which would help banks create a more human-like customer experience.

“The big paradox here is that people think technology will lead to banking becoming more and more automated and less and less personalized, but what we’ve seen coming through here is the view that technology will actually help banking become a lot more personalized,” said Alan McIntyre, head of the Accenture’s banking practice and co-author of the report.

“(It) will give people the impression that the bank knows them a lot better, and in many ways it will take banking back to the feeling that people had when there were more human interactions.”•

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“The New Technology Demanded New Skills”

January 26, 2014 in Excerpts, Science/Tech, Urban Studies | Permalink

In a Washington Post article about power looms coming to factories in 19th-century Massachusetts, James Bessen suggests that the Information Age will ultimately confer wealth to workers as the Industrial Age previously did, something that is certainly possible but not definite. An excerpt:

“When Charles Dickens visited Lowell in 1842, he reported back to his English readers three facts that he thought many of them would find ‘preposterous’: young girls who worked in the mills played the piano, they subscribed to circulating libraries and they published their own literary magazines. To the class-bound English, such activities were ‘above the station’ of factory workers.

British readers expected mill workers to come from the lower classes because the first British mills sought the cheapest labor. This lowest-common-denominator approach wouldn’t have worked in Lowell. While much of the machinery was copied from Britain, the mills were organized differently. In Britain, specialized workshops produced a variety of cloth goods, many of fine quality. In contrast, in Lowell all of the operations involved in turning raw cotton into finished cloth were conducted in one integrated facility. That allowed the production of a highly standardized product in large quantities.

Coordinating all aspects of production under one roof required specialized technical and business skills. The Waltham mill was one of the first business organizations to use professional managers, called mill agents, who were separate from stockholders (though many mill agents also owned stock).

Waltham mills also required a different kind of worker. Mass production demanded training on a large scale and the new technology demanded new skills. In the British craft workshops, sons often learned as informal apprentices to their fathers. But apprenticeships couldn’t quickly train the large numbers of workers the mills required. And technology was changing too quickly for formal classroom training to be practical. Instead, Lowell and his partners sought to recruit intelligent workers who could learn quickly from experience on the job.

This is why American mill owners encouraged the cultural enrichment activities Dickens found so ‘preposterous.'”

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