Banks are too optimistic about digital solutions and are really bad at looking after customers

Photo: Keskuskauppakamari


This talk of Artificial Intelligence (AI), robots and automation replacing workers is about 20 to 30 years too early, if it ever really becomes a reality. By that time things will have changed again, and again and workers will be pushing different jobs with different skills.

Mr. Wahlroos, the boss at Nordea Bank, a bank in Finland, (pictured above) in the mean time, is making foolish remarks about people not having jobs because of automation, robots and AI and that they will need universal basic income. These remarks are self-serving his own vested interests.

Banks, for instance, are not using AI, robots or much automation, even though these things have been around for decades. The internet is here, but that has been here for over 40 years in one form or another. Automated Cash Machines have been around for as long.

Robots are doing nothing in banks except for the following:

  1. Top management behave like them when they automatically granting themselves and their mates huge salaries and bonuses.
  2. The market share of the 2 largest banks here in Finland automatically get higher profits because there is so little competition when they have some 75% of the market between them  share.
  3. The EBC automatically supports banks with generous funding when things get critical!

Customers automatically have to use the internet for banking services because branches and staff are not being made available. Not only that but, banks have discovered that they can pass  on work to customers without lowering the cost of banking products for customers – we have become a cheap source of labor to line the pockets of the bankers.

Note that OP-Group and Nordea are making record profits.

Talk about automated payment machines in shops are also exaggerated. How many shops have them? A tiny minority have them because they are expensive to buy, to maintain and they require constant supervision. If labor is cheaper, then labor it shall be. It is difficult too see that these will take off in the near future.

Nordea, like all banks, is having to spend hundreds of millions on their IT systems to develop, to keep them working and keep them safe. Hackers are there every day and there are no signs that this will stop. The Russians, Chinese, and other nasty folks and teenagers will forever be trying and succeeding to break in. This will be natural limit of networks of all kinds.

And then there is the question of customers. It is probably true that most people are insulted to see that senior management in banks are never around, and that they only talk about profitability, return on capital and how retail customers and SME’s are too expensive as clients. Customers do not seem to be on their radar at all, and if they are, it is to treat them like underlings, while they are some type of genius monarch who knows all the answers.

How do you feel when these people arrive in front of the media in their hand-made suits and fine silk ties, and tell us that we will be out of a job during the coming years and that we will need universal basic income, and that our pensions may not be covered because we are the selfish generation! They then take off to Portugal at 60 years after receiving outrageous salaries, bonuses, share options and pensions. These are the same people who, through the Confederation of Finnish Industry, complain that high taxation on work kills the economy!

Universal basic income is loved by Mr. Wahlroos because he, like Trump, prefers to get somebody else to pay for workers rather than the owners.

And then the question of pensions brought us by Professor Holmström…

… readers should note that the present Finnish pension system does need reforming and can be done based on the Norwegian or Singapore models. This is appropriate because both countries are around the same size as Finland. The annual cost saving of merging them together would be in the region of €3 billion to €4 billion and that amount would cover any shortfall that Holmström is predicting. It also means that pensions could be increased. An article on this proposal is to be read at this link.

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