Will A.I. kill bank
industry jobs?

Help (Not) WantedCrowing about the need to bring jobs back from across the ocean makes for powerful rhetoric, but technological advances account for the lion’s share of lost jobs in the U.S. Financial Times pointed out:

The US did indeed lose about 5.6m manufacturing jobs between 2000 and 2010. But according to a study by the Center for Business and Economic Research at Ball State University, 85 percent of these jobs losses are actually attributable to technological change—largely automation—rather than international trade.

Technology now appears poised to take its toll on banking jobs. How much of a toll depends on whom you believe. Estimates vary from zero to one-half of jobs.

More and more, the culprit of choice seems to be Artificial Intelligence, or AI for short. According to Forbes:

Over the past decade, the digitalization of customer services has led to a decline in the need for front-of-house staff in banks and the subsequent closure of many branches. Similarly, one of the primary areas where banks are implementing new AI solutions is customer services.

As I wrote earlier this year, AI has its artificial fingers in many a financial services industry pie. Examples include day-to-day transactions, online queries, better-informed investment services, fraud detection and prevention, and more. These are not new tasks; they are tasks heretofore performed by humans. 

Hence the UK’s Independent reported former Citigroup CEO Vikram Pandit’s prediction that “developments in technology could cut the number of banking jobs by 30 percent in the next five years.” That was about 20 months ago. If he was right, we should know in about three years.

Consulting firm Opimas seems to agree with Pandit. Last week, Finextra reported:

Opimas believes the asset management industry—already under tremendous pressure due to declining management fees and slowing asset inflows—will see some of the greatest cutbacks in the workforce, shedding about one third of its headcount.

The Bay Area’s Mercury News appears even less optimistic:

Advances in artificial intelligence and automation could replace as many as half the nation’s financial services workers over the next decade, industry experts say, but it’s going to take a big investment to make that happen. James D’Arezzo, CEO of Glendale-based Condusiv Technologies, says that’s where things are headed.

More sanguine is Paula O’Reilly, international consulting firm Accenturemanaging director. Responding earlier this year in American Banker to the notion that AI will lead to “massive job loss,” O’Reilly minced no words, stating, “That mindset is wrong.” Moreover,

Banks looking to successfully deploy AI will need to rely on a vibrant workforce that is retrained and refocused to work in tandem with AI … AI will take back the rote functionality that occupies too much of bankers’ time, unleashing them to use their inherent creative and dynamic abilities.

Allowing that “…The World Economic Forum projects that 5 million jobs will be lost in the top 15 developed economies within the next 24 months,” O’Reilly counters,

More accurately, AI will displace jobs in some areas while creating an equal amount of new jobs elsewhere. The losses will be largely among the transactional workforce, while the direct gains will be in skilled AI-related positions.

It’s true enough that whenever technology obviates hands-on jobs, it creates new jobs in or relating to AI. But there’s no basis for predicting the creation of an equal number of jobs. Regardless of how many workers successfully transition into other positions, AI’s taking over certain jobs, no matter how tedious, will necessarily create redundancies. When that happens, economy demands downsizing.

O’Reilly addresses that concern, writing that Accenture’s “… recent discussions with more than 1,200 banking leaders indicate that more than 90 percent expect these shifts and plan to retrain and redeploy their workforce as needed.” That figure may speak more to the PR skills of 90 percent of CEOs than to reality. Last month, according to Business InsiderAccenture offered less encouraging news:

… while 54 percent of executives in banking say the skills gap will influence workplace strategy, only 3 percent say they plan to increase investment in reskilling over the next three years, according to consulting firm Accenture.

It would be naïve to think that everyone who loses a job to AI will simply step into an AI-related job. Some workers are more retrainable, and some less, than others. Ageism may rear its ugly head in the case of older workers. And while it’s pleasing to talk about freeing workers to perform tasks requiring a human touch, it’s important to remember that not all humans are created equal when it comes to skills. Sometimes there’s a reason certain employees are kept working as far from customers as possible. 

In an article for ForbesQuantexa CEO Vishal Marria seems to land somewhere in the middle:

… one of the primary areas where banks are implementing new AI solutions is customer services … J.P. Morgan uses AI to answer customers’ questions and anticipate what their future needs are likely to be, while UBS’s virtual assistant is powered by Amazon Alexa. These products are the ones that are most likely to replace jobs. 

Aside from chatbots and Robotic Process Automation … the way that banks are currently using AI is not a considerable threat to their employees’ jobs … In these instances, rather than reducing the need for human input, the AI-powered systems have alleviated time pressures on existing investigators and afforded them the time to investigate each case in more detail.

Throughout history, technology has wreaked havoc in terms of job loss in industry after industry. Smartphones alone have cut deeply into a host of products such as video and digital cameras, scientific calculators, bicycle speedometers, encyclopedias, and CD players, to name a few. Significant job loss has been associated with each. I am not unsympathetic. I wish I had a solution.

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