The banking industry puts an appealing spin on a future of contactless payments, branchless banking and cashless society. But it diverts your attention from the dark side of automated financial regimes, says Brett Scott
Automation, the moving from manual tools to machines that replicate the actions of a human using a tool, appears in various forms within everyday financial life. The ATM, for instance, is an automated version of the bank teller of old who, with ledger book and quill pen, would have to exert energy to check your account, hand you cash, and alter your accounts. While financial interactions used to rely on human energy and mental faculty, today's digital interactions are very different. I use an interface to interact with this ATM, which gives me some form of control, but only within the inflexible rules of whatever it will allow me to do. This actually requires energy on my part, so while the machine seems to 'do things for me', the process is also 'self-service'.
Automation of this slippery sort is taking on more and more of personal finance. The glossy adverts of the financial marketing industry put an appealing spin on the future world of contactless payment, branchless banking and cashless society. They focus the mind on problems that are apparently being solved through new technology, but they simultaneously divert attention from the dark side of the automated financial regimes that is emerging around us.
Corporate management is fond of automation because it is a force for scale, standardisation and efficiency – and in turn lowers costs, leading to enhanced profits. The process is perhaps most advanced in the realm of electronic payments, where money is shifted with very little human action at all. Despite recent talk of the rise of digital currencies, most money is digital already, and tapping your contactless payment card sets in motion an elaborate automated system of hard-drive editing that 'moves' your money from one bank data-centre to another. This technology underpins talk of a future 'cashless society'. Bouncy startups like Venmo and iZettle are getting into the payments game, adding friendly new layers to an underlying digital payments infrastructure that is nonetheless still dominated by the banking industry and credit card networks: new forms of banking still work much the same way as old....MORE
Much of the financial system still retains a hybrid structure in which manual human actions interact with automated machine actions. The investment bank trader negotiates a derivatives deal over the phone and then books it into a partly automated back-office system.
Over the years, though, corporate managers have tried to push the power balance in this hybrid model towards the machine side, even in apparently human settings like the bank branch. You can talk with employees behind the Barclays counters, but often they are just there to enter data into a centralised system that tells them how to deal with you. To some degree these employees have agency – the ability to make decisions – but the dominant trend is for them to become subservient to the machine system they work with, unable to operate outside the bounds set by their computer. Indeed, many bank employees cannot explain why the computers have made the decisions they have, and thus they appear as the human face put there to break the news of whatever the algorithm has decided. We might even say they are a human interface to an otherwise algo-robotic system that is accountable only to the senior corporate management, who you will never deal with.
Nevertheless, humans are costly. In their ideal world, bank executives would get rid of as many manual human elements as possible and replace them with software systems moving binary code around on hard drives, a process they refer to as 'digitisation'. This generally means slowly dismantling branches while getting people accustomed to 'self-service'. Indeed, many banks are cutting branches, and many new forms of financial services are found only online, like digital banks Fidor and Atom. Digital banking startup Kreditech claims that bank branches won't exist 10 years hence, "and neither will cost-intensive, manual banking processes":
"We believe algorithms and automated processes are the way to customer-friendly banking," the startup declares confidently.