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AI will wipe out half the banking jobs in a decade
May 26, 2018
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Advances in artificial intelligence (AI) 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, Calif.-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 $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.

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, Cryan said.

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.

“On the service side of AI, you can get right down to the irate customer who wants to know about a deposit, although you’ll still have to get a person involved to handle that if it gets more complex,” he said. “But we’ll shave off that top percentage — 10 to 20 percent of the mechanical and rote issues that come up.”

Potential uses for AI technology include automated customer support, fraud detection, claims management, insurance management, automated virtual financial assistants, predictive analysis in financial services and wealth management services for lower-net-worth customers.

“It’s like anything else — the prediction statement could be a little overblown,” D’Arezzo said. “Back when we were kids we thought we’d all be driving flying cars by now. The pace of adoption in the financial sector will happen fairly soon, but it will be a full decade before we see some significant change.”

Bhagwan Chowdhry, a professor of finance and economics at the UCLA Anderson School of Management, said the future may not be as bleak as some think.

“Technology will eliminate some jobs that are repetitive and require less human judgment,” he said,” But I think they will get replaced by other jobs that humans are better at. Anything that requires judgment is something humans will continue to do. We are not good at multiplying 16-digit numbers, but we’re good at judging people and detecting if someone is telling the truth.”

Meanwhile, Bridget Frey was the only woman on Redfin’s engineering team in Seattle when she joined the online real-estate company more than six years ago. She wasn’t surprised, having worked in the male-dominated tech field for much of her career.

But Frey was determined it would be a short-lived imbalance.

One of the reasons the tech field is so heavily male is that people tend to hire job candidates who remind them of themselves, feeling immediately most comfortable working with similar people, studies find. So Frey made it a mission to participate in many of Redfin’s interviews with potential hires, and she called several female candidates herself to recruit them to the company, reasoning that more women were likely to accept job offers if they knew they wouldn’t be the only woman on the team.

Her attempts — together with multiple tactics the company has employed — are starting to work. Women now make up 31.7 percent of the company’s technical workforce, up from 12.5 percent when Frey joined in 2011. In Redfin’s upper ranks, the number is even higher: Women hold 46 percent of positions at the manager level and above.

“Now I walk around, and it’s rare that I’m the only woman in a meeting,” she said in the company’s downtown Seattle headquarters.

Tech companies are notorious for the dearth of female employees in their ranks and for the treatment of those women — something that has been put in the spotlight in recent months with the gender-discrimination lawsuits against Microsoft, Google, Twitter and Oracle.

Tribune News Service

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