20 October 2017
visit www.atos.net

Bungled automated decisions costing FS firms money and customers

31 January 2013  |  5093 views  |  0 Man holding pen drawing graph on glass wall

An ever increasing reliance on technology brings considerable risks for the financial services industry, with bungled automated decisions costing many firms both money and customers, according to research from the Economist Intelligence Unit (EIU).

Technology has revolutionised all areas of the financial world in recent years, from the emergence of online and mobile banking to the advent of computerised high-frequency trading.

However, the EIU notes, computers have also bought associated risks, such as the recent high-profile IT meltdown at RBS, which has cost the bank around £175 million in compensation, and the Knight Capital algo debacle, which nearly forced the company into bankruptcy.

Of 63 senior financial services executives from Europe, North America and Asia Pacific surveyed by the EIU for a wider study sponsored by Ricoh, 37% say that an automated decision made by a computer programme has cost them money at least once in the past six months. Nearly as many - 31% - say that they've lost customers in the same period as a result.

Carsten Bruhn, EVP, Ricoh Europe, says: "Automated processes can bring significant benefits to the financial services sector, and while technology may provide high intelligence, it is essential that the processes are reviewed and updated regularly by humans (ie business experts), to ensure compliance with regulations, and that security standards and efficiencies are maintained."

Bankers think that there are some areas of their business were machines can take the lead - when asked where human imagination or intuition was most critical, just eight per cent say managing regulations and six per cent information security. Human intervention remains essential though for nearly half of respondents when it comes to interacting with customers and for nearly a third for managing risk.

Despite the challenges, respondents remain optimistic about the benefits of technology: 41% say their team's best innovations of the past three years could not have been delivered without supporting tech, and one in three say they could not even have been conceived without it. A further 78% said that technology helps them to be more productive.

The caveat to this optimism is that the vast majority believe that human-technology interaction will only add value if people are more creative with the processes developed to connect the two. Ultimately such innovation should lead to machines and humans working in symphony, but at the moment a large minority (40%) are not confident that the difficulties will all be ironed out.

"It's clear that technology plays an essential role in supporting new ideas for the financial services industry. The opportunity is to create a future where technology enriches human skills rather than competing with them, therefore empowering human creativity and innovation," adds Bruhn.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Nasdaq suffers data feed glitch

Nasdaq suffers data feed glitch

04 January 2013  |  6854 views  |  0 comments | 3 tweets
New Year celebrations delayed by Lloyds ATM failure

New Year celebrations delayed by Lloyds ATM failure

02 January 2013  |  8037 views  |  0 comments | 6 tweets | 3 linkedin
Getco emerges as victor in Knight Capital bid battle

Getco emerges as victor in Knight Capital bid battle

19 December 2012  |  4465 views  |  0 comments | 2 linkedin
NAB suffers five-hour outage

NAB suffers five-hour outage

05 September 2012  |  8971 views  |  0 comments
In wake of RBS meltdown, MPs warn banks on IT systems

In wake of RBS meltdown, MPs warn banks on IT systems

04 September 2012  |  9068 views  |  3 comments
Japanese watchdog slams TSE over trading outage

Japanese watchdog slams TSE over trading outage

24 August 2012  |  5455 views  |  0 comments
Knight closes in on $400m rescue deal

Knight closes in on $400m rescue deal

06 August 2012  |  5648 views  |  0 comments
RBS sets aside £125m to cover IT meltdown costs

RBS sets aside £125m to cover IT meltdown costs

03 August 2012  |  8440 views  |  0 comments
RBS meltdown blamed on Indian IT operative

RBS meltdown blamed on Indian IT operative

27 June 2012  |  14856 views  |  5 comments

Related blogs

Create a blog about this story (membership required)
Register nowvisit www.niceactimize.com

Top topics

Most viewed Most shared
satelliteGates Foundation backs Ripple collaboratio...
8519 views comments | 13 tweets | 10 linkedin
HSBC partners Bud for open banking trialHSBC partners Bud for open banking trial
8477 views comments | 21 tweets | 26 linkedin
IBM uses blockchain to improve cross-border payments processingIBM uses blockchain to improve cross-borde...
7565 views comments | 9 tweets | 17 linkedin
Sibos 2017: API or the highwaySibos 2017: API or the highway
7017 views comments | 10 tweets | 22 linkedin
Eight banks form joint venture to launch blockchain trade platformEight banks form joint venture to launch b...
6628 views comments | 14 tweets | 23 linkedin

Featured job

to £70K base, £105K ote, benefits
London, UK

Find your next job