Defining the future: Talking AI and Banking 2.0 with Peter Rix

03 November 2017

Nearly a month has passed since I first met Peter Rix, Chief Technology Officer at Absa, and learned of his role in the Bank’s technology revolution. Since then I’ve met and interviewed a number of his colleagues in the technology leadership team, and my journey to tell the tale of an organisation on the brink of redefining the digital banking experience has been a fascinating one, to say the least. While a month may not seem like much, anyone who understands the exponential rate of technological progress will tell you otherwise. Suffice it to say, Peter hasn’t wasted a second of this time in pushing forward with the Bank’s Google-level tech aspirations.

Infrastructure for innovation

The dust may have settled from the 2016 Hackathon, but the energy and enthusiasm it generated is still electric. Peter has made it a priority for the Bank to explore the ideas that arose from the event and his team is creating a forum to push for the top 10 or 12 ideas to be developed and rolled out through the business. The culture of innovation is gaining momentum, and Peter’s team is constantly refining and stimulating this, developing the capability to streamline the process.

“I’ve been driving cloud and Application Programming Interfaces (APIs), pushing for a completely integrated and connected development environment,” Peter tells me. “There’s also a huge push to finalise the engineering network and take it live this month.”

The engineering network refers to completely agile, automated infrastructure that will revolutionise development processes within Absa. This means a new level of freedom for in-house developers, never before seen in a banking environment.

“It will mean their laptops aren’t locked down; developers will be given far more creative freedom and capability. They’ll be able to download pre-built development environments that massively reduce latency. Everything will be automated so they can work at pace, and it will all be connected back to the Bank through APIs, locking down the older legacy stuff. Ultimately we’re creating a brave new world for innovation and development that redefines the concept of agile development.”

To put it simply, Peter and his team are building infrastructure that will revolutionise the way their developers work and collaborate, giving them access to resources and capabilities that will allow them to build, test and launch new software faster than ever.

“We’re giving them this beautiful engineering network to operate in, but we’re not going to push it on them. We’re hoping they will migrate organically when they see how seamless and powerful it is.”

This new network, coupled with flexibility in working hours and location, a focus on collaboration between departments and divisions, and numerous other initiatives aimed at reducing red tape and typical corporate bureaucracy, are giving Absa’s developers the freedom and autonomy to work in new, better ways and maximise their potential.

And it really is making a difference.

“We found that initially, our developers gravitated towards working remotely, but soon enough they started coming back, preferring to be in the office. They missed the culture and energy that’s become a part of the working environment,” says Peter with a smile “There’s a lot of excitement around what we’re doing, and everyone wants to be on the frontline.”

The corporate culture is visibly changing as the business evolves and matures. There’s a transition towards employee autonomy that may just change the way businesses operate in future.

The paradigms are shifting.

The dawn of AI and the new age of banking

“Three years ago the cloud existed without scale. Today we have nearly unlimited computing power within the cloud, and there’s nothing we can’t process – as long as you can afford it,” says Peter. “In today’s world we have all this seamless data input from devices that are recording and observing everything we do. We could be storing the data, collating it, analysing it in the cloud and learning from it.”

Peter demonstrates what he means by saying, “Hey, Siri” to his phone, which, lying untouched on the table in front of him, replies, “I’m listening.” It might be unnerving if it weren’t so commonplace in this modern age of ‘always-on’ technology.

Peter takes it a step further by showing me how his iPhone stores a record of his movements throughout the day, logging exactly where he’s been, at what time and for how long. Add to this the fact that modern smartphones also log and store one’s biometrics through various sensors and it’s hard to dispute that the concept of privacy in the modern age is somewhat outdated.

Visual input and subsequent recognition has also progressed in leaps and bounds and even basic AI apps can quickly and effectively recognise most objects, colours and textures.

It all boils down to a constant stream of multimedia data being collected from myriad sources around the world, and fed into machine-learning databases such as Google’s Tensor Flow, where it is analysed, patterns are recognised and machine learning takes place. In this way machines are mapping human behaviour and learning to identify irregularities, eventually predicting or preempting such behaviours and adapting to these with an appropriate response, mimicking human intelligence.

“Inevitably AI will revolutionise nearly every aspect of human life,” says Peter. “We’ve only just started incorporating elements of it into the Bank and it’s already making a huge impact. Through automation, we increase scale and speed and can provide more personalised service to customers. As machines aren’t subject to human working hours, we can also extend banking hours and enhance our responsiveness.”

What AI means for cyber security

With every single customer call, transaction and interaction being recorded and analysed, a wealth of data is obtained and fed through the bank’s machine-learning databases. Over time, and with enough data to sample, certain irregularities emerge.

“The machines pick up these ‘exceptions’, which raise red flags,” says Peter. “For example, we recently noticed that multiple users were acting identically on different accounts and we realised it was fraud. We identified nine cases like this and reported it to the regulator. They were blown away that we actually caught it.”

Additionally, every call to the bank’s customer care center is analysed to pick up common questions and issues, with the aim of predicting and preempting these and ultimately getting to the point where customer service is intuitively handled by machines, faster and more effectively, at any hour of the day. Currently, Absa uses an AI virtual assistant to handle basic queries, transferring to a human representative when it doesn’t have an appropriate response. The virtual assistant observes the way this is handled by its human counterpart, learning from this and integrating it into its database for future use.

Innovation is the point

While there are multiple projects going on behind the scenes, the face of Absa’s exploration into AI is undoubtedly Chat Banking via Twitter and Facebook Messenger, the world-first social media banking platform, that’s changing the way millennials bank.

“At the moment we have just over 1 000 active users on there,” Peter admits, “but whether people use it or not isn’t the point. It’s cutting edge; it’s innovation. You can ask what we’re getting out of it when only the early adopters are using it at the moment, but we didn’t launch it with the intention of getting everyone to switch over to it immediately. People were scared of email when it first came out; they were scared of Internet banking! In essence, it’s about adopting an agile approach in everything we do. We could wait two years, perfect it and launch it with all the bells and whistles, but instead, we build it, launch it, see who uses it and how, then learn from that and constantly improve on it, iteratively.”

The advantage of this strategy might not be clear in isolation. Simply launching something and leaving it to succeed or fail has little purpose. However, coupled with Absa’s AI capability, it all forms part of a much larger picture and long-term vision. Giving their customers something new to interact with provides a new input for data and a new avenue for learning, which will help to improve future tech and innovation.

“When we look to the future and how AI is going to shape this, there are a few things I think we will definitely see in the next 10 years,” says Peter. “Firstly, deep personalisation will take priority and every customer will experience completely customised, holistic service based on their individual needs. AI will facilitate the scale and speed to make this viable. We’ll also see prices driven down across the board, with volumes increasing exponentially as machines make it feasible to multitask and perform business functions much faster than ever before. Interconnected services will become the norm. We’ll see industries such as banking, telecommunications, health and wellness, travel and more start to merge in these integrated ecosystems. Some industries will die and this will give rise to entirely new ones.”

Peter admits he doesn’t like to predict too far down the line, but it’s hard to argue with what he’s saying.

“There’s no doubt that pressure will be felt in white-collar industries, and I think we’ll see a growing need to reskill and redefine many occupations. When, for example, self-driving cars become standard, the motor insurance industry will either die, or evolve and change. It’s harsh, but it’s a case of adapt or die. As AI becomes ubiquitous, we’ll see many ethics and compliance struggles, but I’m optimistic about the future. I think we will see the dawn of shared growth and corporations collaborating towards a common goal. With enhanced productivity and true AI-aided multitasking capability, I think the economy will grow and jobs will be created.

“We need to embrace this future or be left behind.”

Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.