The everyday uses of AI

When it comes to Artificial Intelligence (AI), many of the people I talk to think that it is either something that is coming in the future, or interest in it is limited to geeks. Some see it as a negative tool that will destroy employment for people. And they are surprised when I tell them that they are probably using AI in their everyday lives already — they just aren’t aware that something like a Google search is AI based. And those adverts you keep seeing on social media because one day last week you searched for ‘holidays in the Maldives’ — that’s all down to AI.

Here are some of the everyday uses of AI that you may not be aware of. They have been compiled by 12 experts from Forbes Technology Council.

1. Customer Service

Data analytics and AI help brands anticipate what their customers want and deliver more intelligent customer experiences — better than the old call centre one anyway.

2. Personalised Shopping

When you shop online and you visit a site and look at a product, you may find you suddenly get recommendations for similar products — that’s AI.

3. Protecting Finances

For credit card companies and banks, AI is indispensible, especially in detecting fraudulent activity on your account. It saves all of us from the pain.

4. Drive Safer

You don’t need a self-driving car to use AI. For example, lane-departure warnings, adaptive cruise control and automated emergency braking are all AI functions.

5. Improving Agriculture

Agriculture is an important element of our lives, because we all want and need to eat. AI is improving this important sector with the following examples: satellites scanning farm fields to monitor crop and soil health; machine learning models that track and predict environmental impacts, like droughts; and big data to differentiate between plants and weeds for pesticide control.

6. Our Trust in Information

Trust in information is one of the most critical issues of our current times. We are bombarded with images and articles that we just don’t know if they are telling the truth or not. Experts say that AI will change how we learn and the level of trust we place in information. AI will help us identify the deep fakes and all those methods of sharing ‘fake’ information, and that is very important.

The ways in which we use AI are growing all the time — and if you think you’re not using it, you almost certainly already are.

Tech companies lose their glamour

I have been reading with interest an article by Enrique Dans about ‘The Rise and Fall of Technology Companies’, and his analysis of the latest company rankings from Glassdoor, the site that allows employees of companies in the United States to anonymously provide information about their companies. It is the go-to place for job candidates, because they can discover a lot of good info here. From a company’s perspective, what Glassdoor has to say, can potentially attract or put off new talent.

Glassdoor’s 2020 league table is out, and while some people may complain about the way it collects data, one thing is clear this year, technology companies are losing their glamour. You might be surprised to find that both Apple and Google have dropped their positions: indeed, Google isn’t even in the Top 10 companies to work for. Facebook has dropped 16 places and Amazon isn’t even in the Top 100.

The popular perception is that these companies offer such amazing perks in-house that every young person would want to work there. Having said that, Amazon is fast becoming seen as something of a rogue employer that treats its staff, especially those who make sure we all get our orders, as slave labour.

The magic has gone

Dans says that the Glassdoor league table reflects what the media has been saying for some time. That the big tech companies are losing their mythical status. Indeed, when I use the word ‘glamour’ in this context, it is quite appropriate, as the word originally comes from the Scots in the 17th century and meant “a magic spell.” So, you can see why I say they are losing it, and with the consumer as well as the employee.

What happened?

In 2008 after the collapse of the banking sector, new graduates flocked to the tech guys instead of heading to Wall St. Dans, who teaches, states: “everybody wanted to work for the technology companies: I remember all too well the interest my students showed when I invited a senior figure from one of them to a class. Now, my students are often highly critical of the tech companies. Interestingly, it’s the younger students who are most concerned.”

And the concern is about regulating the big tech companies. Facebook has made this a concern, as we have seen over the last few years. But, who or what is replacing the tech companies as the place most people want to work?

According to the Glassdoor data, it’s a very mixed bag, ranging from software companies like Hubspot, to “consultancies, airlines or hamburger chains.” There is no real trend that is discernible as yet, and we may have to wait a couple of years for one to emerge. But right now the tech companies have lost their glamour — perhaps they should look for a fairy to cast a new spell.

Do we need credit card rewards?

This topic may resonate more with North American readers than with Europeans, the latter being not quite so obsessed with credit card rewards. I came across an article in Forbes by Alan McIntyre on this topic, which made me pause to think about the future of cards and rewards, and whether this rather old-fashioned system will survive in a more fintech-led financial system.

For some time Americans have been receiving bonuses for spending on their cards. They have come to expect these ‘gifts’. Of course all this comes at a cost to the credit card companies. According to new research from Accenture, rewards spending by the top five credit card issuers grew to $31 billion in 2018, up from $11 billion in 2015.

McIntyre suggests that the cash-back Apple card might be “the peak of card rewards” and that this entire system is on its way out. As he also mentions, card companies are having to figure out how to deal “with a less attractive volume-value trade-off.”

At the moment the payments industry is still on the winning side with the trade-off, as its revenue has grown by $50 over the last three years. It’s worth somewhere around $300 billion and it is expected to grow 4% by 2025.

However, the American payments industry is lagging a bit behind the rest of the world in this respect. In Europe and Asia, the consumer payments sector is moving to “high-volume, low-margin payments,” and “many of those are moving over account-to-account payment rails rather than over the card networks.” Here’s why it’s changing. In Asia, for example, it costs a merchant only 0.5% on average to accept an Alipay payment, while credit card payments in the U.S. can still be over 2% for many merchants.

The pressure on the North American payments industry to shift over to this model will come from the merchants. The consumer is less likely to change, because they love getting those rewards when they spend with their card. But that significant percentage difference in cost to the merchant is a big deal.

McIntyre says that recent research shows, “We are already seeing merchants begin to favoor debit over credit as a lower-cost payment mechanism, and favouring their own loyalty schemes rather than relying on those run by the card-issuing banks.”

And he says there are two other factors that will end rewards: “The first is the belated development of real-time payments in the U.S. and the opportunity it provides for merchants to have lower-cost payments that will be even cheaper than debit transactions.”

The second major driver of change will be “the continued internalization of payments by major retailers to avoid having to pay merchant acceptance fees at all.” Starbucks, Walmart, Uber and Amazon are the frontrunners in this system.

It seems unlikely to me, thinking over all this, that the old North American credit card rewards model will last for much longer. But I do think that whilst the merchants may be the driving force of this change, there will also be a need for consumer education, so that they understand why their rewards have been taken away.

Will Neobanks Reward Investors?

Venture capital firms have been flocking to invest in neobanks, and they must be hoping that they will see big rewards. Expectations are high, but it appears that some questions are being asked about whether or not the hype around fintech will yield the financial returns that everyone hopes for.

It is true that the neobanks are attracting plenty of customers; N26 and Revolut being two good examples of customer growth. According to Accenture, UK-based digital banks could add 35 million customers over the next year, and they have around 13 million at present. Its data also shows that in the first six months of 2019, the UK neobanks added five million customers, indicating that the sector is picking up momentum this year.

However, there are some challenges remaining. First, the traditional banks still occupy the biggest slice of the market, and then there are the financial regulators like the FCA, which are extremely averse to any finance related institution cutting corners. Plus, as John Detrixhe points out, we have seen that companies in other ‘disrupting’ sectors, Uber and WeWork, have demonstrated that big valuations and intense customer growth are not sure signs of success. He also says that the fintechs need to ask themselves if they will continue to be seen as a niche product, or will customers eventually see them as a one-stop financial service.

Hence, there seems to be some changes happening in fintech investment, with investors looking at fintech tools beyond neobanks that will prove to provide bigger gains. This move is based on the idea that digital banks will never really disrupt the traditional banks.

So, they are looking at fintech software, such as cloud-hosted software and systems that make it easier to sign up for a new account. In other words, there is a belief circulating that the incumbent banks can fend off the newcomers by adopting new technology that allows them to offer the same benefits as their digital competitors.

These fintech tools are not as sexy an investment as Revolut say, but they could perform better in the long term, because if the incumbent banks can provide the same service as Revolut, then why would customers switch?

The situation in Europe is different to that in other regions where there are millions of people who are unbanked. Europeans have fewer problems with banking access, but perhaps don’t always have a great customer experience. So there is still plenty of investor enthusiasm in the West. Detrixhe says, “Eighteen of Europe’s biggest fintechs are now valued at more than $1 billion, according to Richard Diffenthal, a partner at Hogan Lovells. Investors are lining up to give them even more money.”

The one advantage that neobanks have over the traditional banks is that the incumbents can’t just rip up their legacy and start afresh. They are having to implement change one small step at a time, and that will take time. The neobanks need to use this opportunity, i.e. the incumbent banks slow-moving change, to accelerate their position as a trustworthy alternative to the banks that have been trading for hundreds of years. Then they will provide the returns that make investors happy.