Smart machines are creating an uncertain future for those who work for a living. We already see skillful robots building cars and such with nary a worker in sight, but many job killers lurk in computers where advanced software does the calculations once accomplished by human brains.
In 2015, the Wall Street Journal reported in an article titled The New Bookkeeper Is a Robot, “Since 2004, the median number of full-time employees in the finance department at big companies has declined 40% to about 71 people for every $1 billion of revenue, down from 119, according to Hackett Group, a consulting firm.”
So financial software is doing wonders for companies that don’t mind deleting workers to increase their bottom line. Banks are a big part of that automation revolution.
It was reported this week: Robots greet customers at world’s first personless bank branch in China.
Below, a robot greets customers in the human-free bank in Shanghai.
Interestingly, the Bureau of Labor Statistics counted 502,700 bank teller jobs in 2016 but forecast a decline in the occupation for coming years. The BLS reported 318,600 loan officers in 2016 with a positive job outlook for the future of that occupation.
Even though the banking employment future looks sketchy, Bloomberg reported in February that big investment banks had hoped to use H-1b visas to obtain more foreign workers, but have been thwarted by President Trump’s cutback of the program: Big Banks in U.S. Forced to Reevaluate Hiring Foreign Workers.
The article noted, “Eight major investment banks increased their H-1B applications for high-skilled workers by almost 60 percent over five years to more than 7,000 in fiscal year 2017, according to a Bloomberg analysis of visa filing data.”
Heaven forbid the banks might have to hire American citizens!
Artificial intelligence will wipe out half the banking jobs in a decade, experts say, San Jose Mercury-News, April 20, 2018
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. And the process will be complicated.
“Unless banks deal with the performance issues that AI will cause for ultra-large databases, they will not be able to take the money gained by eliminating positions and spend it on the new services and products they will need in order to stay competitive,” he said.
Intensive hardware upgrades are often cited as an answer to the problem, but D’Arezzo said that’s prohibitively expensive. He cited a recent announcement from the Tokyo Institute of Technology Global Scientific and Computing Center as an example.
The center is developing a supercomputer to meet the demands of artificial intelligence and big data applications. But existing supercomputers tend to cost anywhere from $50 million to several hundred million dollars, he said, which negates the cost-reduction advantages of AI technology.
But technical issues aside, senior banking executives increasingly agree on the inevitability of artificial intelligence-based services — and the job losses they will create.
“It is going to happen”
Speaking to an audience last year in Frankfurt, Germany, Deutsche Bank CEO John Cryan predicted a “bonfire” of industry jobs as automation moves forward.
“In our bank we have people doing work like robots,” he said. “Tomorrow we will have robots behaving like people. It doesn’t matter if we as a bank will participate in these changes or not, it is going to happen.”
Increased processing power, cloud storage and other developments are making many tasks possible that once were considered too complex for automation, according to Cryan.
D’Arezzo, whose company works to improve existing software performance, said the financial industry is being swamped by “a tsunami of data,” including new compliance requirements for customer privacy and constantly changing bank regulations.
“It’s an explosion of data, and then you have AI on the other side which increases that information load,” he said. “This puts a major stress on the ability of the financial industry to process all of that data. That industry is spending more on IT than any other industry, including healthcare and manufacturing.”
D’Arezzo said many jobs will inevitably disappear.