Latest interview with Sebastian Siemiatkowski, CEO of Klarna on AI, Banks and Jobs.
video
Brief summary:
- AI will analyze personal finances, such as mortgage spending, and proactively offer better deals, handling all the paperwork once the user approves.
- With increased customer mobility, consumers will gravitate towards providers offering the best value at the lowest cost, which will significantly reduce profits in retail banking.
- The innovation of digital assistant threatened traditional banks because if it is effective, customers may no longer feel loyalty to their bank, focusing instead on the value provided by the assistant.
- Some incumbents may succeed in adapting, but fintechs like Klarna and Revolut, and these which are fully regulated banks with modern technology stacks, have a strong advantage over legacy institutions burdened with outdated systems.
- Still there is a cautious approach to using AI and ML in banking, especially regarding writing tasks due to trust and risk concerns. However, AI proves highly effective in other areas, such as customer service. Specifically, AI has shown great success in dispute management by consistently analyzing evidence from merchants and consumers to make fair decisions on refunding or retaining money.
- Decision-making tasks performed by AI can achieve higher consistency and quality compared to humans, who may become bored or less consistent over time. Trust in AI for specific tasks can be built through this reliability, although implementing such systems requires careful engineering and thoughtful setup.
- The impact of AI on knowledge work presents societal challenges as displaced workers may not easily transition to new roles. The company has responded by significantly increasing revenue per employee while reducing staff, illustrating efficiency gains despite a smaller workforce.
- High concern about regulatory impact on innovation and jobs, questioning whether regulations might hinder progress or provide necessary guidelines.
- increased customer mobility seen in banking, where funds and deposits can move more freely between financial institutions. This shift poses challenges for banks in managing liquidity risks if customers transfer their balances elsewhere. Despite these challenges, the change is viewed positively for society, as it reduces excess profits in an industry previously seen as less efficient.
- Argues that AI promotes consolidation because the cost of producing software is rapidly decreasing. Previously, creating software required many highly paid developers coding manually, but now machines can generate code more efficiently and improve every six months. This reduction in software production costs will likely reduce excess profits in technology.
#ai #innovationcommunity
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Todor Kostov
Director
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