Disruption is Not a Four Letter Word
First published in Connect
With all things blockchain and crypto dominating headlines in the mainstream media, it is easy to overlook the looming impact of Regtech, AI and RPA and their potential to fundamentally alter the financial and professional services sectors in Jersey.
This month sees Jersey's first "Tech Week", a full schedule of events dedicated to showcasing the latest technology and their potential benefit to the Island. Given the vast sums that are often involved with Initial Coin Offerings (ICOs), and the well-rehearsed angles around scammers and the dark-web, it is hardly surprising that crypto-assets garner column inches and conference slots. What pleased me about Tech Week is its more evolved agenda focussing on other areas, particularly RegTech, AI and robotic process automation (RPA).
Whilst not as sexy as crypto, the prevalence of financial and other professional service in the Jersey economy and population means that RegTech, AI and RPA should have a far greater impact on the future prosperity of the Island. With an increasing drive towards better value and commoditisation the potential impact of technological enhancements to repetitive, analytical and time consuming tasks cannot be ignored (whether or not they use blockchain).
There are obviously practical and legacy issues to be considered for larger organisations looking to change the way they work but a lot of the arguments often used against the adoption of disruptive technologies are short-sighted. Many argue culling 90% of junior professionals, whose early careers often include an element of repetitive, process driven work that could be undertaken more effectively by AI or RPA means the senior lawyers, bankers or accountants of tomorrow will lack the traditional coal face experience we currently rely on.
The answer is simple. Adapt. The time and cost savings realised by new technologies can be used to retrain existing staff for more suitable and generally more fulfilling roles or improving the work-life balance of staff to attract a higher quality of employee (who incidentally will be better suited to the more engaging roles now available). All this can usually be achieved while still delivering a higher quality of service.
Looking at the accountancy profession as an example, which I'm sad to say is often quicker to adopt technology than us lawyers, the introduction of blockchain technology (which is effectively a self-auditing and immutable ledger) isn't resulting in significantly reduced numbers of accountants just a change in the way they work. Accountants will still be needed to assist with the inevitable transition to blockchain based systems and thereafter to maintain, monitor and build on those systems to deliver maximum benefit. The most sought after accountants will be those who embraced and engaged with blockchain technology, not those who shied away from it. The application of this technology to traditional audit work will also likely leave resource available for more lucrative consultancy and advisory work. Accountancy training already recognises this and offers students courses and certifications on blockchain technology.
The legal profession is also starting to take its first steps in this direction. In March, Allen & Overy introduced a "LegalTech and Project Management" graduate scheme and earlier this summer Clifford Chance was the first to offer a LawTech focussed training contract as a route to qualification as an English solicitor. Both show recognition from market leaders of the evolving nature of legal practice and the need to adapt the standard model. Similar developments can be seen in the use of cloud based process automation services such as Autologyx or Luminance, which used to be limited to outliers and early adopters but are now increasingly common place.
It isn't clear what the nature of legal and professional services will look like in 10 or even 5 years' time, but it is clear that there is only one possible direction and that Jersey needs to be ready. A failure to embrace innovative solutions in professional services will leave us out-dated and unable to deliver a user-experience that matches client expectations, the expectations of fellow professionals or the offerings of other jurisdictions.