Perspectives

The age of outsourced decisioning!

“Good morning, ma’am. Can I take your order?”

We may no longer hear this warm greeting at a restaurant in the future. We are moving into an age when a multitude of technology beings will make decisions on our behalf. In the case of a restaurant, an intelligent facial recognition system at the door would have already identified you. The smart algorithm at the back end would have assessed your preferences and matched them up with your health records. If that is not enough, it could potentially scan your bank account details to understand whether your finances are tight this month. So even before you are seated, your order is placed and brought to you by a nice-looking humanoid. When you finish, you walk out of the restaurant while the payment is automatically made from your linked digital payment option.

The only thing you have to do is to eat, and that is only until technology figures out a way to provide you the required nutrients directly!

Welcome to the world of outsourced decisions.

The above example may not have been fully implemented yet; however, all the components needed for it to work are already available and in use.

As humans evolved, we started using mechanical devices to assist primarily in areas that were effort intensive. This shift marked the start of outsourcing labor-intensive tasks to machines.  With the advent of computers and integration of mechanics and computers, machines were intelligently programmed to remove repetitive jobs. The same concept was extended to the simple process automation of jobs using integrated scanners, OCRs, and a series of algorithms. This meant outsourcing of pure logic-based tasks to computers harnessing their computing ability.

With the ever-growing technology ecosystem and the advent and maturing of technologies like AI, Deep Learning, AR and VR, IoT, and many others, the lines between virtual and reality are blurring. We are stepping into an age that will be defined by the integration of human capabilities with computers. Interestingly, we are now moving to integrate mental and emotional capabilities rather than physical capabilities. All this is leading to an era where humans may no longer need to make decisions.

A multitude of emerging technologies tied together

We are witnessing an exponential growth in innovations on the technology front. These emerging technologies can be broadly classified as data-driven technologies, user interface–based technologies, and technologies that focus on removing process inefficiencies.

Data-driven technologies focus on understanding past and currently available data to predict the future. In our restaurant example, the technologies used to identify your preference, health records, and financial data and finally propose an order are all data-driven technologies.

User interface–based technologies offer differential experience to the users and act as the interface between humans and technology. Again, in our example, the facial recognition system at the door of the restaurant (and potentially the humanoid that brought out the order) would be considered user interface–based technologies.

The third set of technologies, as the name suggests, focuses on removing process inefficiencies and thereby making it easier and faster to transact without the need for human interaction. The automated bill payment through the linked digital wallet in the restaurant is a classic example of this set of technologies.

While we may be able to categorize these technologies, it is important to note that none of these technologies would have as much of an impact if they were not used together. The reason we can make great business cases out of these technology sets is because we can stitch the technologies together to create an end-to-end use case.

From influencing consumer decisions to making them

Moving decision-making out of the consumer’s ambit is not really a new concept. For generations, organizations have tried to influence consumer behavior and decision-making. Marketers have used multiple means to influence consumer behavior through advertisements and brand-building exercises. The entire exercise of influencing consumer decisions targeted the heuristic decision-making process of humans and setting beliefs, creating stereotypes, and building top-of-mind recall, all of which are crucial elements of decision-making.

As technology matures and starts integrating more with human behavior and emotions, organizations are taking the next step toward making decisions on behalf of the consumer. Because this scenario would remove heuristics, the bet is that the decisions will eventually be good for the consumer. Even in the case of the restaurant example, while you may be craving a bacon cheeseburger pizza, the decision made in conjunction with your health records may order something else for you, hopefully for your own good.

The next logical question is whether we as consumers would allow technology to make decisions on our behalf. And the answer to that question is not easy. On one hand, we have human decision-making processes, which we have used since humans evolved, though it can be prone to errors of judgement, and on the other we have decisions that are made by technology, which takes into consideration all relevant factors and probabilities.

There are multiple examples where organizations are taking the decision away (to some extent) from consumers by instituting default choices. Psychologically, defaulting is a key factor in decisioning. There are countries around the globe, especially in Europe, where the option of organ donation defaults to “Yes” unless someone wants to opt out. In other countries, is the option defaults to “No” and the citizen has to choose to opt in. Few people choose to go against the default value in either of these situations, as it is convenient to go along with the default.

Moving decisions away from consumers will also influence the way organizations define their business models and will force them to rethink their strategies.

Uber and many other providers provide default billing options for clients. While the customers have a choice to change the default value, they seldom use it. This trend has far-reaching implications on traditional methods of customer onboarding and retention for financial institutions. With a lack of visibility among end users, becoming a default choice of payment method will become critical to these companies. The all-important aspect of differentiating based on customers’ transaction experiences will revert to the original service provider and hence may reduce customer ownership by financial institutions.

Trust, the most crucial factor in outsourced decision making

When all is said and done, it won’t be easy to take complete decision-making abilities away from humans anytime soon. Options will always be available and we can always make choices.

Certain sets of decisions will probably never be taken away from humans. Technology today has not evolved to the extent that it can completely replicate our right-brain activities like emotions and appreciation of art. Such decisions are best left with humans, while more left-brain decisions that involve algorithmic decision-making could easily be outsourced to technology.

We have trusted machines to do what they are supposed to do. For example, a coffee machine will make coffee and we trust it with that and only that task. This trust is easy to build because we are aware that these machines are not intelligent and will do what we program them to do. However, with advances in technology, AI opens opportunities for us to explore the possibilities of outsourcing decisions to machines. The coffee machine may be able to tell us which kind of brew would be best for us that day. There is probably nothing wrong with that, and maybe it’s time for us to start trusting it to dispense the right brew and amount of coffee as soon as we ask for it.

As technology evolves, our interactions with it will change significantly and we may have to learn to live in an ecosystem where machines and humans are equals. We just need to remain aware that we do not cede our individuality to machines.

Ankur Razdan Global head of digital solutions for financial inclusion

With more than 16 years of experience across multiple technology-led roles focusing on the banking and financial services sector. He is a passionate thought leader with specific interest in emerging technologies.

The age of outsourced decisioning!