At first glance, there are few similarities between Iceland and my motherland of South Africa. The first noticeable difference is the weather, which is always a popular topic. Yet, as is often the case, more things unite than divide us.
South Africa, and Africa in general, have long faced many challenges – sometimes barely eking out marginal economic growth, and innovation is critical to ensure that the countries remain competitive.
Having managed a large technology team within a multi-national bank in the African continent and having seen the technological developments within the banking industry internationally, I assumed Iceland would be the land of innovation. I thought that all the banks in Iceland would be jumping on the opportunity to reinvent themselves.
Little did I know about how the financial collapse of 2008 has redefined the banking industry within Iceland, leaving it with a healthy dose of conservatism when it comes to innovation. We are living in a strange reality where Iceland as a country has a thriving innovation industry, with broad support from government, academia, and civil/corporate structures. Yet, we need to be cautious about how we embrace these new technologies and innovations. We must drive responsible banking while introducing change – a tricky balance.
Given this tricky balance, I am often amazed to see how far Iceland has come regarding digitalizing traditional banking products. We are world leaders, with healthy competition between the big banks and newcomers like Indó, and we never miss an opportunity to explore the next frontier, such as chatbots and branchless banking. But that’s just the point; it is limited to traditional banking products. We still live in a world of debit cards, credit cards, mortgages, securities trading, etc.
I often wonder what banking would look like if we invented it today with the current technologies that we have available. Would we have so many different account types? Why must I remember which card to use to accumulate the best rewards? How do I remember what all the legal terms mean when I need it, even if it has been translated into ordinary language? I don’t think so.
Banking does not have to give you a migraine just by thinking about it. DBS, the world’s leading digital bank, has a vision statement of “Make Banking Joyful,” which shows that as an industry, we recognize that we must change. I think Generative Artificial Intelligence (GenAI) allows us to take another step on this journey – which, in my view, has the potential to be the game-changer the banking industry needs.
Firstly, I need to ask you to ignore all the crazy articles you see in your social media or news feeds every day. GenAI will not lead to doomsday or euphoria overnight; it is quite a bit more complicated than it looks. What it does provide is an amazingly powerful engine that generates content (pictures, text, music, videos) in a way that we as humans understand, and it can combine crazy concepts that we would never think about; that is why a lot of manufacturing and pharmaceutical companies are already using it for product development and innovation.
This complex content generation of AI is a superpower that we have always required people for. But before you panic, let me assure you that the role of people is not disappearing; it is changing. GenAI can potentially remove a lot of the repetitive work we do today. Think about a customer service agent who has been answering more or less the same question over and over again. Today, the answer to repetitive questions can be automated, freeing up the time of the customer service agent and enabling him to use his in-depth banking and customer experience knowledge to evaluate new concepts and ideas that will make a real difference in our clients’ lives.
This is an exciting proposition, but it requires that we start thinking about the skills and regulatory environment that we need to ensure that we don’t create a dystopian future of robots controlling the world (or at least our finances). Iceland has all the ingredients to become a world leader in this space. We are small enough to try to solve manageable problems, and at the same time, we are digitally advanced with access to incredible knowledge and skills.
Looking back on my seven years in Iceland, Iceland is still where banking will be reimagined. Yet, for that to happen, we need to be willing to embrace the innovative potential of the Icelandic banking system – within the context of responsible banking. The ability to commercialize breakthrough technology such as GenAI will be the key to the competitiveness of individual banks – and the banking system – and Icelandic society's competitiveness as a whole.