AI is set to upend the finance industry, adding tens of billions of dollars in profit while leading to the automation of as many as half of jobs in the sector, according to research from Citi.
Over half – 54% – of jobs in banking have a high potential for automation, more than any other industry, says the report. Another 12% of jobs have high potential for “augmentation”.
GenAI in finance is still largely at a proof-of-concept stage, but, says Citi, “we’re in a period of rapid and unprecedented transition”.
Says the report: “Long-established jobs have been eliminated in past periods of technological transformation, to be replaced by new ones. Many firms have vanished too. AI will repeat this cycle, possibly speeding it up.”
While the emergence of AI may be bad news for jobs, it will be god for the bottom line, potentially driving global banking industry profits to $2 trillion by 2028, a nine per cent (or $170 billion) increase over the next five years.
Citi argues that AI may be adopted faster by digitally native, cloud-based firms, such as fintechs and Big Tech, with agile incumbent banks following fast. However, many incumbents, weighed down by tech and culture debt, could lag in AI adoption, losing market share.
The bank is looking to avoid being a laggard by equipping 40,000 coders with the ability to experiment with different AI technologies.
Rival JPMorgan recently said it will give AI training to all new employees, as it seeks to cement its reputation as an AI powerhouse. Bank chief Jamie Dimon has likened the arrival of AI to the development of the printing press and the steam engine.
The Citi report warns that, while AI could drive productivity gains, a shift to a “bot-powered” world raises questions around data security, regulation, compliance, ethics and competition that all need to be navigated.
In addition: “Since AI models are known to hallucinate and create information that does not exist, organizations run the risk of AI chatbots going fully autonomous and negatively affecting the business financially or its reputation.”