Deutsche Bank CEO John Cryan predicts a “bonfire” of banking industry jobs in the coming decades, as reported in the Chicago Tribune. Cryan was speaking at a 2017 industry event in Frankfurt, Germany. “In our bank, we have people doing work like robots,” he declared. “Tomorrow we’ll have robots behaving like people.” He went on to note that the inevitability of this change. Whether his bank actively participates in AI development makes little difference. As AI technology advances, the entire industry will have little choice but to convert.
Indeed, the banking sector as a whole has employed AI extensively. The focus, so far, has been on using AI applications to replace humans on the tasks Cryan cites as robotic. Financial and banking firms are increasing the use of AI for assessing credit quality of potential borrowers, pricing insurance contracts, automating interactions with clients, and estimating trading position risks, as explained in Business Tech. Examples of these uses abound. Anyone calling a bank’s customer service number must go through AI before reaching a live person. Over the past decade, banks have increased the customer service tasks these AI representatives handle. Virtually instant credit approvals require AI systems. Insurance pricing requires enormous mathematical calculation, which AI excels at. Firms now offer automated portfolio management. AI rebalances your portfolio, cancelling the need for a human investment advisor.
This all adds up to cost savings for banks, but that savings won’t come from chopping workers; it will come from increased margins, efficiency, and service as workers take advantage of freedom from rote tasks to focus on creative and service-oriented job duties that make the sector stronger and more profitable. This trend still alarms many people, who fear an economic backlash from the growth of AI. These fears are overblown, like fear of technological change has been so many times in the past.
AI will create more banking jobs than it eliminates
Automation has had a long history of creating jobs. As factories became automated, workers feared robots would replace them; instead, automation resulted in mass manufacturing. The proliferation of manufactured goods created many more factories and many more jobs.
Computers automate many everyday tasks. They did not eliminate office workers, but they changed the way work was done. The end result has been giant corporate campuses employing tens of thousands of workers, many of whom would not have been needed before the computer was invented. Within a few years of smartphones, millions of people worldwide found work as Uber and Lyft drivers.
As AI advances in the banking industry, banks will demand more technology and data workers. The proliferation of cloud computing and AI itself has left banks buried underneath mountains of data. AI makes it possible for banks to use this data, which just a few years ago would have been beyond their processing capability. But, while AI can sort this data and take actions based on its programming, it cannot use independent judgement. Humans must set strategy and tactics. Humans must view the data provided by AI and decide how to exploit it. Humans, in a very real way, will be in the driver’s seat of AI, directing it where to go, rather than slowly walking the data, as they did before the AI age.
In a Financial Review article, Dr. Andrew Charlton, co-founder of Alpha Beta Advisors, explains that the current rate of job loss from automation is far below what it was during the agricultural automation boom of the 1950s and the factory automation boom of the 1990s. Charlton cites AI’s ability to quickly create new jobs as the reason for the minimal job losses. AI has proven its ability to outpace humans in many labor and administrative tasks. But while AI has taken over these types of jobs, it has created new ones where skills involving creativity, human interaction, and responding to emotions.
When it comes to the banking industry, Dr. Charlton notes that with the advent of AI, a bank teller spends less time counting bank notes and more time helping customers. This makes sense as a natural progression in the banking business. The old days of waiting in line to make a deposit are ending. A new era where you contact a person at the bank to help you grow your money in innovative ways had come on the horizon. New products that help people save money are being created everyday. People are needed to build these services, sell these services, and assist customers in maximizing their savings according to their unique circumstances. These duties require a human being with creativity, judgement, and the ability to create a positive interaction.
It’s natural for people to fear change. Uncertainty means risk. AI, however, stands to create new and meaningful jobs that use uniquely human skills. This bodes well for all. As Dr. Andrew Charlton notes, Australia stands to gain huge economic benefits from AI, but it must embrace the technology. The key will be supporting workers in transitioning to an AI powered workplace.