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Free Your Inner Luddite & Find Risk Management Peace

4 min read
Sep 7, 2018

Luddite is not a flattering term. The Oxford English Dictionary defines it as “a person opposed to new technology or ways of working.”

Doubling down on its derogatory definition, the dictionary also provides a spelling-bee style usage: "a small-minded Luddite resisting progress." (Spelling bee fans: Imagine hearing it in the voice of Dr. Jacques Bailly, official pronouncer of The Scripps National Spelling Bee.)

But like the belief that inflammable is the opposite of flammable (they mean the same thing), you can see the Great Wall of China from the moon (no manmade structure is visible) or dropping a penny off the roof of the Empire State Building can kill someone (Mythbusters busted that one), the term Luddite is commonly misunderstood—and can actually be a good thing.

The Real Luddites of Northern England

As Smithsonian magazine explains, Luddites didn’t really have a problem with technology. Their beef was with factory owners, and a closer look at history makes them sound more like early union activists than your grandma who still starts every text message with “Dear Michael.”

As Smithsonian magazine explains, “the original Luddites were neither opposed to technology nor inept at using it. Many were highly skilled machine operators in the textile industry. Nor was the technology they attacked particularly new…"

“As the Industrial Revolution began, workers naturally worried about being displaced by increasingly efficient machines. But the Luddites themselves ‘were totally fine with machines,’ says Kevin Binfield, editor of the 2004 collection Writings of the Luddites. They confined their attacks to manufacturers who used machines in what they called ‘a fraudulent and deceitful manner’ to get around standard labor practices. ‘They just wanted machines that made high-quality goods,’ says Binfield, ‘and they wanted these machines to be run by workers who had gone through an apprenticeship and got paid decent wages.’”

The Phantom Ludd

Now for another shocker: There was no Mr.Ludd.

Legend has it that 22 years before the first Luddite protests, “a young apprentice named Ludd or Ludham was working at a stocking frame when a superior admonished him for knitting too loosely. Ordered to ‘square his needles,’ the enraged apprentice instead grabbed a hammer and flattened the entire mechanism. The story eventually made its way to Nottingham, where protesters turned Ned Ludd into their symbolic leader,” Smithsonian magazine recounts.

Thus, Ludd is basically an urban legend who went Office Space crazy on a piece of equipment. (Fun image here: https://www.mimeo.com/blog/destroying-office-printer/.)

Luddite Risk Management

Embracing the Best Luddites Have to Offer

What does the fictional Mr. Ludd have to do with modern-day risk management? More than you might think.  

Luddites weren’t anti-technology. They were worried about losing their jobs to automation. Many in the banking industry today feel the same way. Every time we turn around, there’s another news story about how AI will steal everyone’s job. 

But financial institutions understand that a computer program can’t replicate their people’s intuition, problem-solving abilities, and interpersonal skills. At Ncontracts, we designed our Risk Performance Management software suite to complement your FI’s people, increasing their efficiency and enabling them to focus on higher-level tasks. 

When managers possess the tools to understand their risk exposure better, they can focus on remediating issues, which leads to easier examinations and a satisfied board. What banking manager doesn’t want to give its board a tidy package outlining risk? 

Luddites lost the war against the loom because the barons of the Industrial Revolution realized they could sell an inferior product. Any banking board worth its salt today realizes that you can’t entirely outsource risk management to a computer program. Today’s financial institutions need technology platforms to be effective, but these platforms serve their masters – the people who make financial institutions hum. 

Ncontracts doesn’t design platforms to replace people – it builds Knowledge-as-a-Service (KaaS) systems that empower community banks and credit unions to grow in a safe and sound manner, serve their changing consumer base by mitigating the risks of adopting digital banking and fintech solutions, and build a repository of institutional knowledge. 

Don't Worry About What Our Programs Will Find

Some managers fear losing their jobs when an issue is discovered. But risk assessments are not performance reviews, and they’re certainly not job interviews. While it’s never fun to inform your boss about negative findings from an audit, consider the alternative: waiting until your exam comes around and regulators force your hand to address issues.  

Would you rather reveal to the board that an enforcement action is coming or that you discovered an issue that you’re proactively addressing? Managers shouldn’t fear automating time-consuming processes performed more efficiently by a technology platform. Instead, they should worry about the consequences of not having the time to deal with all the possible risks – cyberattacks on third-party vendors that store your consumers’ data, natural disasters that jeopardize your institution’s operational integrity, Fair Lending compliance issues, and much more.      

We’ll leave you with one last story about automation. It’s a far different tale from what happened to the Luddites.  

When ATMs became widespread, many bank tellers fretted about losing their jobs. After all, if machines could dispense money, why would consumers come into a bank and receive the same service from a teller? 

But something unexpected happened. ATMs gave consumers the idea that they should be able to access their money anywhere. They began to expect more banking services – not less. As a result, banks opened more branches. And by opening more branches, financial institutions needed – you guessed it – more tellers. 

The story of technological innovation in business is not always about replacing employees with computers. Most of the time, it’s about making industries more productive so they can increase hiring. When we focus on the history of the Luddites, we choose the story that speaks to our fears about technology rather than all the other stories showing how technology has increased worker productivity and made them more satisfied in their careers.

Ready to see how our solutions can transform your financial institution into a technological powerhouse for people?

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