AI is poised to transform the finance industry, potentially adding tens of billions of dollars in profit while automating up to half of the sector’s jobs, according to research from Citi.
In banking, over half (54%) of jobs are highly susceptible to automation, more than any other industry. Additionally, 12% of occupations have high potential for “augmentation.”
While Generative AI (GenAI) in finance is predominantly in the proof-of-concept phase, Citi indicates we are experiencing a period of rapid and unprecedented change. Historically, established positions have been eliminated during previous technological revolutions, paving the way for new roles. AI is expected to follow this pattern, potentially accelerating the transformation.
Despite the potential job impacts, AI could significantly enhance profitability, possibly driving global banking sector profits to $2 trillion by 2028—an increase of nine percent ($170 billion) over the next five years.
Citi suggests that digitally native, cloud-based companies, including fintechs and Big Tech, may adopt AI more rapidly than traditional banks. Some incumbent banks, burdened by outdated technology and cultural challenges, risk lagging in AI integration and could lose market share. To prevent this, Citi plans to empower 40,000 coders to explore various AI technologies.
In a similar vein, JPMorgan has announced plans to provide AI training to all new employees, reinforcing its position as a leader in AI. Bank CEO Jamie Dimon has compared the impact of AI to that of the printing press and the steam engine.
However, the Citi report also highlights challenges associated with a “bot-powered” landscape, including concerns around data security, regulation, compliance, ethics, and competition. There is also a risk that AI models, known for “hallucinating” and generating false information, could operate autonomously, potentially harming a business’s financial standing or reputation.
For those interested in the evolving challenges and opportunities AI presents in the banking sector, Finextra’s inaugural NextGenAI conference is scheduled for November 26, 2024. Register your interest to learn more.