9 min

The digital family

The internet connects more than half the human race. What began as a tool for an ‘informed public’ has become an everyday support and is often the best way to keep in touch, shop or take care of administrative matters. Families are overwhelmingly going digital and making the internet a household standard. The customer relationship is being revolutionised and organisations are having to reinvent their services and language.

“There is no terror in the bang, only in the anticipation of it”

Alfred Hitchcock

A look ahead to the major trends of the upcoming years and their impact on the financial and economic sector. Produced by Lonsdale’s strategic planning division, with the participation of Olivier Nosetti, Head of IT at Banque de Luxembourg.

In the space of thirty years, digital tools have dramatically changed the face of the world. The digital transformation has spread to all spheres of society and is changing not only our relationship with technology but also our relationships with friends and family. The appearance of the internet in 19691 has joined the list of great inventions that have democratised access to information. In addition to global reach, the internet’s power lies in the speed at which it has propagated and, more importantly, been adopted. Two years after its birth, when it was still designed for scientific research, the internet linked 23 US universities. In 1977 more than one hundred were connected. In 1991 the technology fell into the public domain and was open to all. In 1994 servers were saturated. The arrival of so many users jammed the networks and scientists complained they could no longer work. The internet’s success, over such a short period of time, surprised its creators, who had lost control. Henceforth, the internet belonged to its users, who “spread the word”2, created new protocols for exchanging data and dictated how the internet could be used. Demand drove supply. The pace of innovation and speed of information had to match the ever-increasing demands of the general public. Accelerated by Covid 19 and the “great lockdown”, the digital conquest has now won over every family member as well as the people they typically interact with. As a result, online (and social media) standards are seeping into general consumption, and all services, including banking, are having to provide offers that are hyper-customised and hyper-convenient. How will widespread digitisation impact families’ relationships with banks? Are fintech and an all-digital approach really the future of banking? And as virtual services and data processing become ever more common, will tomorrow’s bankers be robots?

The end of the divide

The start of the 21st century was the time of the technological mirage. As technological tools were being developed, so a new boundary began to form between social classes, generations and geographical regions. A bipolar world seemed to be giving rise to a “homo numericus” at the same time as marginalising a portion of the population. Today, though, the digital divide is gone, and we are entering what economist Jeremy Rifkin calls “the age of access”3. Anyone can get a service or a piece of information immediately, simply by requesting it. The democratisation of technologies and the development of broadband across regions and communities have connected most of the population. In 2020 more than 58% of people over 70 accessed the internet every day, whereas in 2015 it was barely 30%. Says Olivier Nosetti, head of IT at Banque de Luxembourg: “There are fewer and fewer generational differences, and digital use is now a natural reflex among people who until recently were hesitant about it.” Since lockdown, global internet traffic has increased 70% and for the first time in history, the global population and the connected population are indistinguishable. In particular, digital technology is no longer that cold, technical tool but rather has become a vector of sociability. In 2020 the messaging platform WhatsApp tripled its daily chat volume, with more than half its users having formed private groups for family members, from the youngest to the oldest, to keep in touch. The society of physical distance is now one of digital “coming together”.

“There are fewer and fewer generational differences, and digital use is now a natural reflex among people who until recently were hesitant about it”.

Olivier Nosetti

Empathic machines

The pandemic has accelerated the digital transition. By steering digital habits towards the family circle and contributing to the boom in e-commerce, the public health crisis has highlighted the “growing influence of digital technology on our lives”.4 The virtual world is gaining an advantage over the real world, with the virtual seeming more real. Rather than representing a dehumanised relationship with a machine, social media tools are promoting real relationships and replicating family life. In particular, individuals are increasingly gravitating towards private platforms (instant messaging or Facebook groups), which are micro-channels for genuine, useful conversations. Digital technology allows organisations to get closer to consumers and create personal chat bubbles with each of them. In the United States, Nike has kept in touch with its customers by creating a WhatsApp group that also allows them to purchase or order an item by text message. Social media and messaging platforms individualise and personalise relationships with customers. With so much data, digital tools are becoming empathic machines capable of anticipating human needs and developing an emotional relationship with every family member. For instance, Alexa, Amazon’s voice assistant, is developing technology that will analyse feelings so it can identify emotions and recognise the user’s mood. And voice technology is already being used by US insurance companies to identify how a customer is feeling (based on their positive or negative phrasing) so it can respond in the appropriate tone.

The temptation of the all-digital approach

According to German sociologist Hartmut Rosa, what modern humanity is experiencing is acceleration.5 Speed has become the yardstick against which all facets of the economy are measured. The current massive digitisation of society is an illustration of this acceleration. As Olivier Nosetti explains, “Cycles of disruption and innovation are getting shorter and shorter, as are the regulations that go with them”. Today 80% of customers use digital channels for most of their transactions,6 and virtual currencies (or cryptocurrencies) are available to the general public.<7 This is of concern to the traditional players, who are barely or ill-prepared for the transformation and are up against ageing assets. However, it would be risky to suddenly digitise the entire customer journey just to catch up with technology. According to Olivier Nosetti, it’s a battle that would be lost before it had even begun: “Banks must avoid being carried away by the belief in technology at all costs. There is so much new technology flooding in that it’s impossible to keep up with it. Rather, banks have to introduce digital tools little by little.” Digital technology is being added to the physical world but it is not replacing it. Thanks to their digital and mobile services, some banks are able to react in real time, facilitate loans remotely and provide personalised advice. The large volume of data generated on a daily basis is not just task automation, but rather it allows every priority to be centred around a human being. Data provides more knowledge and understanding about a customer and gives a holistic view of their journey through life so they can be supported at every stage of it. The digitisation of banks would favour tasks that are complex and intelligent and reduce those that have the least value. Says Olivier Nosetti: “Some banker’s tasks are going to be replaced for the better, but we’re still some way off from artificial intelligence being able to perform a banker’s intelligent tasks.” The challenge for the finance industry is therefore to recognise which tasks are complementary and to delegate the most operational tasks to software and algorithms so that the banker can focus more on their role as adviser. It’s a major “dividing up of tasks” that addresses users’ need for personal contact: the more digital tools are developed and become part of daily life, the more there is a need for real relationships. In an all-digital world, human contact is special and becomes a refuge. It also guarantees data protection – another sensitive issue when it comes to digitisation. Aware of the value of their data,8 users do not trust the internet and even find its use risky.9 As Olivier Nosetti points out: “You can’t place your trust in artificial intelligence. Digital technology is there to support bankers in their tasks and help them get close to customers but it is not there to replace them.”

« You can’t place your trust in artificial intelligence. Digital technology is there to support bankers in their tasks and help them get close to customers but it is not there to replace them. »

Olivier Nosetti

Based on these core, salient points, we can devise two scenarios just to see how digitisation might continue to transform the banking sector. As in any exercise involving a fictitious scenario, these two proposals combine verified facts and subjective biases and pit outlook against prediction.

Scenario 1: Telesociety

In many sectors, the risks of a global pandemic were the “trigger” for a totally digitised society. What we glimpsed during lockdown is now becoming widespread and permanent. In this scenario, the internet is organised into micro-communities so that people can communicate with one another more and more, based on the group to which they belong. Schools empty out but fill up on dedicated platforms where teachers control classes via instant messaging on smartphones. From telecommuting to telemedicine, mobile society turns into an immobile one where all tasks are performed remotely. Homes are “digital households” that offer permanent contact with the outside world so occupants never have to leave. To manage their accounts and savings, customers can arrange all their transactions by voice using their smart speakers. For more complex transactions and better advice, they can turn to bankers who are available in real time via video in WhatsApp groups or via live videos on Instagram. Now it is just as easy to send a message to a banker as to a family member, and this often forges a relationship of friendship. But trust is key. A permanent bond is created with bankers that facilitates customers’ relationships both within their family and with the outside world.

Scenario 2: Data, money and robots

The digital transformation has transformed mankind. The banker’s role has changed considerably and the banker is now a family member in their own right. Advisers are no longer intermediaries who pop up from time to time to settle financial situations. Thanks to automated services and new communication channels, advisers become stakeholders in their customers’ daily lives. They can help find an apartment, choose the best school for the youngest member of the family or plan a house move. All operational tasks are done by robots and artificial intelligence which work for bankers and support them in their advisory role. For instance, to determine the best possible choice for a home loan, the bank can generate in real time a report of the best locations to move to and the neighbourhood’s urban development. Robots provide the information and humans decipher it and guide the customer. Robots are frequently the servants who deliver the banker’s message straight to the home. They gather information on a daily basis, assist customers in a number of day-to-day tasks and transfer all data to the bank, which can process it in real time and adjust financial transactions accordingly. But a fear starts to creep into people’s minds: by entrusting our memory to algorithms, do we not risk losing everything? Financial institutions therefore introduce new professions such as digital archivists and documentalists, who store customers’ data manually, safeguarding it from any digital malice and keeping it out of sight of the robots.

In both scenarios, digital technology supports the human’s role as adviser and seeks a balance between the relationship conducted remotely and the relationship of trust. Far from the utopia of autonomous artificial intelligence, this outlook draws a balance between digital tools and mankind’s intelligence. Money, the eternal cause of worry, seems unable to entrust itself entirely to digital technology but requires advice, listening and education to be understood. These are emotional qualities that machines still lack, at least for now.

Key points

The digital divide between generations, geographical regions and social classes is shrinking. Digital practices differ less and less as tools become democratised and broadband gains ground. Digital technology is no longer optional for any sector of the economy.

As they seek relationships of convenience, users are migrating to micro-platforms where they can chat with brands and make their purchases by text message or voice memo.

Digital technology is being added to the physical world but is not replacing it. On the contrary, the all-digital approach is bringing bankers’ advisory role to the fore. While customers are wary about how their data is used, the main challenge for tomorrow’s banks is that of trust, with a healthy, virtuous and profitable use of digital technology.

1 In 1969 two computers exchanged data for the first time, giving birth to ARPANET, the forerunner of what we know today as the internet.
2 Excerpt from the French radio programme Les temps qui changent on France Culture, 1994
3 Jeremy Rifkin, The Age of Access: The New Culture of Hypercapitalism, TarcherPerigee, 2001
4 Alain Finkielkraut, L’esprit public, France Culture, 2020
5 Hartmut Rosa, Social Acceleration: A New Theory of Modernity, Columbia University Press, 2013
6 French Banking Federation, “Banking and Innovation” report, 2019
7 In 2020, to cope with the recession, a travel company offered customers the option of paying for their purchases with the virtual currency of their choice.
8 Especially since the data breach, a major scandal that hit Facebook, regarding the leak of users’ data. In 2020 the theft of data from the website Doctolib increased suspicion about data security.
9 Acsel Barometer of French digital confidence, Harris Interactive, 2020