Author: Jesse Jacob
The author is a student at the National University of Advanced Legal Studies, Kochi
I. Introduction
Artificial Intelligence (‘AI’) and its applications keep rapidly evolving, revolutionizing the delivery of services in manners we might not even imagine. The entry of voice-driven AI technology applications, such as Alexa, has essentially left many flabbergasted. These compact smart speakers can also include banking services within the new paradigm of information and communication services they offer. As consumer pressure eventually constrains banks to shift to the next stage in AI-Driven Banking i.e., voice banking, concerns surrounding possible use of the customer personal data and usage trends to affect fair competition would begin to loom. Proactive recognition of such threats is imperative to prevent such possibilities from materialising, considering the unprecedented pace with which AI-driven voice banking systems could work. This article discusses these issues and suggests solutions.
There is a rapid surge in services which bring minimal-effort-access, at the comfort of our homes and different service sectors are forced by competitive pressure to provide those services too. For instance, as food delivery apps made its entry, restaurants faced both pressure and incentives to sign up and incorporate these services to compete for the attention of customers motivated to have their food delivered at their doorstep. Other examples of technology and AI-driven functionalities that offer ease of access and services at the tap of a finger include ride-hailing apps, home-delivered salon services, and others.
In the banking sector, there is an increased consumer demand for voice banking. With banks implementing policies to facilitate voice banking solutions, it is pertinent to note that relevant Big Data concerns under competition law are lurking. The strategic use of consumer data extracted under the garb of ease of access could also be a competitive asset which can be used to threaten fair competition. However, it may be noted that this article would be restricting its scope to the Indian scenario.
II. Clamour for Advanced Solutions: A Need Banks Can’t Ignore
“Voice banking through these machines is where we are going”, says Benoit Legrand, Chief Innovation Officer at ING. People becoming lazier essentially create a demand for easier service access solutions such as voice banking, he explains. As this shift occurs, the pioneering banks and financial institutions would have a clear advantage in navigating through customer preferences, since early innovators would have more experience in identifying such preferences in comparison vis-à-vis their counterparts who choose to enter the scene later; it would be rather unwise from a business perspective to let go of the advantage if you can help it. Indian banks would certainly experience the demand pressure owing to the rapid transition to digital banking solutions, thanks to ‘nudges’ such as the demonetization.
III. “Alexa, What’s My Account Balance?”: Voice Banking Services and Trends
Voice-activated technologies have been rapidly progressing in demand over the years. Tyfone, a tech company that has developed voice banking solutions, quote statistics which suggest a steep surge in the use of smart speakers and voice AI assistants by this year-end. Companies like Typhone claim that these could assist banks to bring banking services into the living rooms of potential customers. In their “Voice Banking Datasheet”, they emphasize the potential digital marketing enhancements springing from voice banking solutions, because of their ability to engage customers in satisfying conversations.
This does raise eyebrows since the access to personal information and data on bank transactions done by the customers could get misused to threaten competition. Technological innovation has been continuously shaping the payments industry; the short-lived appreciation for the ‘speed’ of online banking interfaces quickly gave way for faster payments of the sorts of G-Pay, PhonPe and the like. Here, the surge in adoption of smart speakers would most likely facilitate a solid demand for voice banking services.
IV. Concerns Looming as Banks Fast Forward to Voice Banking Implementation
As banks transition to voice banking solutions, users might well have to agree to the collection of personal data and usage trends, bestowing the banks with a competitive asset; this brings Big Data concerns into place. This could eventually result in the erosion of user privacy as they sign up for convenience. But often these trade-offs are made without adequate disclosure about how consumer data will be used, shared, or even marketed without the consumer’s free and un-coerced consent.
Apart from targeted marketing and privacy issues, Big Data might also threaten fair competition in the Banking industry owing to the way the banks might use the personal data and usage trends of individual users. Banks seem ready to embrace rapid changes in technology. But they might not always be prepared or equipped with the required technological prowess or sophisticated infrastructure to create the intended customer experience under voice banking.
USAA’s Darrius Jones shares concerns over how much their banking institution can accomplish with the available skill levels, while not compromising on standards of data use.
As the demand for a transition to voice command increases, banks might well resort to outsourcing the technological side of the system where they don’t have the required expertise. This could seem harmless per se, but impediments to fair competition could be lurking in the form of data used by their technology partners and by themselves.
For instance, in partnership with Amazon, FFS (Financial Software Systems) had prepared a voice banking system for the United Bank of India. Subcontracting to experts seems very reasonable at first sight. But digging deeper into what FFS promises could never fail to raise eyebrows over the collateral effects of this partnering arrangement. For instance, as explained by FFS themselves on their website, this relationship “increases the bank’s cross-selling opportunities with access to rich customer data.” One wants to know exactly what these “opportunities” mean and whether customers have freely consented to those uses.
Such issues are responsible for concerns such as on how the access to personal data of customers and data on individual usage trends would be used. Would the data be re-sold? Did customers give consent? And would the use of that data in the hands of only limited commercial partners create a threat to the fair competition? Let’s delve into how this would affect the Indian scenario, leaving aside cross border threats in this regard, if any.
V. Big Data Issues Creeping In Emerging Concerns and their Relation to Voice Banking Systems
Balancing convenience and compliance could certainly prove to be a real bottleneck for banks choosing to transition to voice banking. From a competition law point of view, the key question is whether access to data would endow the enterprises in question with market power and a competitive advantage over their competitors. Also, wealthier companies, that can afford expensive data analysing instruments and can develop complex self-learning computing algorithms, could possibly obtain market power in highly concentrated markets, could create high entry barriers, which could be detrimental to fair competition.
With the upsurge in e-commerce, online wallets, and other forms of electronic information, the potential for the sale of data under “cross-selling opportunities” could expose markets to potential privacy and competition law risks. These concerns resonate on a global scale across every nationality that prioritizes fair competition.
VI. Possible Solutions to Protect Fair Competition from Potential Threats
Potential manifestations of Big Data which might emerge as voice banking develops pose a threat to smaller players in the market, and certainly call for proactive preventive measures, considering the quickening pace with which such online systems are introduced. Here are some possible solutions:
Bringing Voice Banking under the Competition Commission of India (CCI) Scanner: It is indeed heartening to find that Big Data firms have been brought under CCI scrutiny in the recent past as announced by Mr Ashok Gupta, Chairman. Nonetheless, it is important to make sure that specialized industries, like the banking sector, to not evade scrutiny. The CCI has the resources to undertake preliminary studies to assess threats to non-price competition, taking cues from the European Commission’s observations of such possible threats to non-price completion in the Microsoft/LinkedIn merger.
Suo Motu Action from the CCI: The potential threats, if found, could prompt suo motu actions and/or orders by the CCI to eliminate practices having an adverse effect on competition protect consumer interests, and ensure freedom of trade in the markets of India. Analogies could be drawn to the European Commission’s decision to impose a heavy fine on Facebook for the non-disclosure of similar access to data following their acquisition of WhatsApp.
Using Privacy and Data Protection Laws to Protect Competition: The Supreme Court’s decision in Justice K.S. Puttaswamy v. Union of India which recognized the Right to Privacy as a fundamental right and informational privacy as a facet of the right to privacy was quoted by the Srikrishna Committee White Paper on Data Protection. The committee draws attention to the US Federal Trade Commission’s practice of protecting consumers by bringing enforcement actions against companies that violate consumer privacy. Although anti-trust laws do not include privacy protection, it could very well be a tool to indirectly facilitate competition by the promotion of consumer privacy norms. Laws or enforcement practices that demand informed consent by consumers, thus limiting the power imbalance to which consumers are subjected, could be a smart counter-action against threats to competition posed by Big Data in voice banking as well.
VII. Bottom Line
Despite the fact that India already has a robust competition law statute and an independent overseeing body (CCI), considering the rapid shift towards digitalisation, existing law may be inadequate to protect consumers if the respective governing bodies are too slow to respond to the impending threat to fair competition. Deploying countermeasures before competitive harm threatens, either directly (through regulatory mechanisms under the CCI), or indirectly (by deploying privacy or data protection laws), could be imperative to maintaining fair competition.