THE WOMEN’S BANK OF COSTA RICA
Another example of banks finding new niche markets that I found in Costa Rica is Banco Kristal, also a subsidiary of the Banco de Costa Rica. It’s a bank run by women, staffed by women, and exclusively for women. Banco Kristal first opened in December 2015, and within a year it had six branch locations and plans to open a total of sixty by 2020. It was established on the premise that women are a key segment of the population that has been traditionally neglected by the banking industry. Women not only account for half the population but also often manage their families’ savings. Plus, there is a growing population of single or divorced mothers, who are in charge of providing for their children’s health and education.
To build a new base of female clients, Banco Kristal hit the market with a chain of stores—yes, they call them stores instead of branches—that don’t resemble traditional banks in the slightest. Instead of traditional tellers and loan officers, Banco Kristal simply has advisers. And instead of having their employees standing behind counters or sitting in cubicles, Banco Kristal has several small tables where the advisers can sit down and talk with their clients. In the corner of each location is a space with games where children can play and have fun while their mothers discuss matters with the bankers. While children are tolerated, if not particularly welcome, in traditional banks, Banco Kristal’s advisers are trained to go out of their way to make sure that the kids have a good time.
As soon as a woman enters a branch with her child, an adviser welcomes her and asks the child if he or she would like to go play in the game area. The adviser is expected not to sit down and begin talking business with the mother until the child is safely settled in. As simple as it may seem, paying extra attention to the children has been a tremendous success, according to Banco Kristal’s executives.
In addition, the Banco Kristal stores offer their clients all sorts of products tailored specifically for them, like special lines of credit for cosmetic surgery, at lower interest rates than other banks. And their websites offer a very simple system of electronic “envelopes” into which clients can deposit their savings: just as their grandmothers once labeled paper envelopes according to what the cash inside was being saved for—for example, expenses, college tuition, or vacation—Banco Kristal clients can do the same sort of thing online.
While it’s too early to tell whether Banco Kristal’s experiment will be successful in the long-term, the early results seem quite positive. During its first year of operation, the bank managed to bring in 55,000 new clients, doubling what it had hoped for when it first opened for business, and the average account balance was $170 per client, which is well above the $60 average for traditional brick-and-mortar banks across Costa Rica, its top executives told me.
MOST BANKERS WILL BE WOMEN
What will the typical banker of the future look like? It won’t be a serious-looking gentleman dressed in a suit and tie, as it has been in the past. According to the EY study, “the banker of the future is more likely to be a young female technologist.” The same study also found that “banking lags behind a number of other industries in gender and ethnic diversity.” In order to survive, banks will have to connect with a new generation of clients, especially women, young people, and those who change jobs every couple of years or work flexible schedules from homes, like those who manage their own small businesses, it says.
An unprecedented number of women already serve as heads of their households. In the United States, women control about half of all private wealth and are the main source of income in 40 percent of families. Globally, women control 65 percent of discretionary consumer spending, and that figure will be growing in the years to come. Meanwhile, the study also shows that 73 percent of women say they’re dissatisfied with the banking industry: among other things, they cite that they receive less attention than male customers from bank employees.
To capture the expanding world of potential female clients, banks will increasingly need executives and employees who better reflect the demographic landscape of their communities. According to the EY study, “there is a positive correlation between greater gender balance on boards, higher share price and better financial performance. From 2005 to 2014, boards with a higher-than-average percentage of women outperformed those with a lower than average percentage by 36%.”
In short, building upon the seemingly oversimplified forecast that the bankers of the future will be “young female technologists,” we can anticipate that bankers will be young people—women and men—whose jobs will focus on analyzing data, creating algorithms, offering personalized financial advice, caring for and maintaining robots, and providing smart customer service. They will be expected to go where the clients are—whether in remote corners of the Internet or in rural areas accessible only by motorcycle—and not expect the clients to come to them.
Bank employees who perform administrative tasks like filing papers or filling out loan application forms are likely to lose their jobs. These employees, who often don’t have a college degree and currently make up about 30 percent of the workforce at most retail banks, will gradually be replaced by more skilled college graduates. “But those lost jobs won’t be replaced by an equal percentage of new positions,” PwC’s Garvey told me. “A more likely figure is that twenty administrative employees whose jobs are automated will be replaced by a single data analyst.” In other words, there will still be bankers, but they will be very different from those of the past, and there will be fewer of them.
5
THEY’RE COMING FOR LAWYERS!
THE FUTURE OF LAW, ACCOUNTING, AND INSURANCE FIRMS
NEW YORK, MIAMI
When BakerHostetler, one of the largest law firms in the country, announced in 2016 that it had just hired its first robot attorney, named Ross, both the company and the manufacturer were quick to say that no attorneys who currently worked for the firm would be losing their jobs. There was nothing to fear, the firm said. This new robotic lawyer would be just another member of the human team of fifty-odd people working in the firm’s bankruptcy division, helping with routine case law research, which had previously been done by young associates fresh out of law school.
Ross, the robot, is powered by IBM’s Watson, the famous supercomputer that won the Jeopardy! contest, the law firm explained. Unlike a Google search, which provides lawyers with numerous articles that they can read and evaluate, Watson searches hundreds of databases stored in its own memory, processes the information, and decides for itself which are the most relevant ones so it can deliver a specific response. In other words, it not only reads the articles but culls the most important information attorneys are looking for. “ROSS is not a way to replace our attorneys—it is a supplemental tool to help them move faster, learn faster, and continually improve,” claimed BakerHostetler’s chief information officer, Bob Craig.
But should we really believe Craig’s reassuring assertion? Many attorneys took Craig’s words with a grain of salt, fearing that their profession could soon become automated like so many others. In answering questions on Jeopardy!, for example, Watson consulted two hundred million pages of content, including the entire Wikipedia encyclopedia, without even being connected to the Internet. What lawyer could compete with that? For now, Ross is simply a service to which attorneys can subscribe online. But since it has an independent database, many in the industry are wondering when this new robot attorney will take on a human’s job and sit at a desk in the firm’s offices alongside his flesh-and-blood colleagues.
Andrew Arruda, chief executive of Ross Intelligence, the company that built the robot lawyer, has said that their “goal is to have ROSS on the legal team of every lawyer in the world.” And professor Ryan Calo, an expert on the intersection of technology and law, has predicted that sooner or later “not using these systems will come to be viewed as antiquated and even irresponsible, like writing a brief on a typewriter.
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HOW MANY LAWYERS WILL BE REPLACED BY ROBOTS?
How many human attorneys will be replaced by the new robot lawyers like Ross in the coming years? In some fields of law, the number could be substantial. Robots and online legal platforms like LegalZoom, RocketLawyer, and LawDepot are already offering many routine legal services that have traditionally been performed by human lawyers, such as wills, divorce proceedings, and rental agreements. In the future, a sizable part of legal consultations will be carried out online. Just as Uber has replaced many traditional taxi drivers, online platforms will replace many of the attorneys currently offering the most basic legal services.
These platforms are in general easy to use. They strike up a dialogue with potential clients, asking what sort of legal services they are looking for, and they offer a menu of options. Do you need a will, a prenup, a divorce settlement, or a partnership agreement? After clicking on the corresponding box, the client answers a few specific questions about the case, and the virtual attorney creates the requested legal document.
The combination of robot attorneys like Ross and virtual legal services platforms like LegalZoom is already rocking the legal profession. According to the Financial Times, in the United Kingdom alone, 31,000 law-related jobs—most of them paralegals and secretaries—have disappeared, and another 114,000 are expected to vanish over the next two decades. In the United States, some are making even more dire predictions. F. Daniel Siciliano, a professor at Stanford Law School who focuses on how technology impacts his profession, has said that in fifteen years, “two-thirds of lawyers won’t practice law, at least not the way they practice now. Many won’t be lawyers at all.”
THE UBERIZATION OF LAW
Nowadays it’s quite hard for a low-income person to hire a good attorney. In order to practice, lawyers in the United States—unlike in many other countries—must pass a very rigorous bar exam after their graduation from law school and are among the best-paid professionals out there. A young attorney working for a midsize or large firm can charge around three hundred dollars an hour, while more experienced lawyers can charge twice that, and the most renowned attorneys in their fields can command up to a thousand dollars an hour. It’s no coincidence that cheaper online platforms have not only cropped up but are also growing by leaps and bounds.
LegalZoom.com, for example, charges a minimum of $29 to draw up a rental agreement, $69 for a basic will, and $299 for an uncontested divorce. Each of these tasks would take a human attorney several hours to prepare, at a minimum rate of $300 per hour, making it much more expensive. Therefore, millions of people are beginning to use virtual legal platforms not only to produce basic contracts but also to send threatening letters to delinquent debtors or neighbors who play the music too loud. In many cases, these platforms aren’t even run by attorneys. Just as growing numbers of people use Uber and Lyft drivers who don’t have taxi licenses, people are increasingly using legal services run by entrepreneurs who never had to pass a state bar exam.
At the time of this writing, RocketLawyer.com has already created 40 million legal documents, answered more than 500,000 legal questions, and registered 7 million businesses, according to the company’s website. Just as Uber’s defenders argue that it’s not worth paying for a traditional taxi service if you can use a private one for less, supporters of these legal online platforms say it makes no sense to pay a human lawyer to draw up a routine contract or register a new company when an algorithm can do the same task easily and more cheaply.
Many attorneys at large firms, however, argue that these legal services websites are aimed at the poorest sectors of the population who normally wouldn’t hire a lawyer. Besides, legal platforms perform only routine tasks and don’t threaten the jobs of attorneys dealing with more complex cases. Abraham C. Reich, a partner and former cochair of Fox Rothschild, a national firm of around 800 attorneys based in Philadelphia, told me that “we really haven’t been impacted by these websites because we represent clients with more sophisticated legal issues. Plus, you have to read the fine print on websites like LegalZoom.com. Even though they offer you some service for a hundred dollars, if there are ever any complications with the case, they refer you to a lawyer. I don’t know what their income structure is, but I wouldn’t be surprised if a good part of their income comes from getting you a low-cost lawyer.”
DONOTPAY.COM IS ALREADY OFFERING FREE ONLINE LEGAL SERVICES
When twenty-year-old Stanford University student Joshua Browder was named by the British daily Financial Times as one of the most innovative lawyers in the United States in 2017, the young man could hardly believe it. He wasn’t even a lawyer. Browder said that he was nevertheless honored by the distinction. He tweeted, “Despite not being a lawyer, nor a college graduate, and wanting to make the entire $200bn profession free!” Browder, born in the United Kingdom to an American father, was the founder of DoNotPay.com, a free website to help people fight traffic tickets in court. The young man had received numerous parking and traffic tickets as a teenager in London and had discovered that the appeals process was so routine that he could basically just send the same letter all the time.
So Browder created his website, DoNotPay.com, where people who felt they had been ticketed unfairly could answer a few basic questions about the incident—such as whether they had parked outside the lines because of a medical emergency or because a “No Parking” sign was blocked from their view—and the program would produce the legal paperwork for appealing the case. DoNotPay.com became an instant success. According to Browder, by the end of 2017, the platform had saved people $9.3 million by challenging 375,000 parking tickets.
It was so successful, in fact, that Browder soon expanded the scope of his website to include legal letters challenging other types of issues, from broken rental agreements to claims against airlines for delayed flights. When you first visit the website, you’re greeted with a line asking, “What can I help you with?” You then type in the nature of your problem, answer a few basic questions, and receive an automated legal document to send to the party who committed the offense. After receiving $1.1 million in seed funding from a top venture capital firm, Browder said that his company will continue to offer free legal services. Like many other free websites, it will accept ads in the future in order to fund much more ambitious free legal services, he said.
“I am not doing this to make any money whatsoever,” Browder said, adding that he has always resented the fact that many lawyers profit from poor people’s troubles. “As part of the funding (and all future financings), I will take a $1/pound salary until the law is free for everyone in America/UK,” he said. “Of course, we are a long way from that goal, but I hope that DoNotPay will ultimately give everyone the same legal power as the richest in society.” For now, DoNotPay.com is a fairly bare-bones website, but its mission to offer free legal services to everybody could shake up at least part of the legal industry in the long run.
ALGORITHMS ARE ALSO LOOKING TO REPLACE JUDGES
Besides the robot lawyers, there are growing numbers of legal websites that offer to solve disputes, posing a threat to the jobs of judges and mediators. The best-known of these websites is Modria.com, cofounded in 2011 by Colin Rule, former director of online dispute resolution for eBay and PayPal. He claims to have successfully resolved some 400 million disputes between people who bought products online and those who sold them. There are already three times as many legal disputes between buyers and sellers on eBay that have been decided with “online dispute resolution” than all the lawsuits filed in the entire U.S. court system.
And the spread of these algorithms suggests that in the near future, computer programs will be able to resolve increasingly complex cases. If computer programs can already resolve disputes between buyers and sellers on eBay, why couldn’t they do the same for disputes between husbands and wives, for example, or creditors and debtors? Unlike RocketLawyer.com, Modria.com doesn�
��t work for individual clients, but is subcontracted by companies. In other words, companies hire Modria.com to resolve complaints from unhappy customers, instead of having their own in-house dispute-resolution departments. Typically, Modria.com resolves complaints from people who bought something online, whether it’s a shirt that doesn’t fit, a dress that arrived too late to wear to a wedding, or an electronic device that simply doesn’t work. Its algorithms solve these disputes without any human intervention, the company says.
IN FIVE OR TEN YEARS, MODRIA WILL BE ABLE TO RESOLVE ANY DISPUTE
Let’s say someone just paid $500 for a guitar on eBay, but when it arrived, it came with a crack. Angry, the customer doesn’t want to waste time on hold waiting to speak with someone in customer service who might be on the other side of the globe, or with a robot, so he decides to file a complaint online. He visits the “resolve your problem” page on eBay’s website, and eBay forwards the complaint to Modria.com. There the unhappy customer can choose from a menu of options such as “the product arrived late,” “the product was damaged,” or “the product was not as described.”
The Robots Are Coming! Page 17