Automation in the field of finance: bank employees may be left without work due to robots
Due to the development of financial technologies, many professionals working in the banking sector may become unclaimed. Journalists of Bloomberg analyzed the results of a large Scandinavian bank, conducting a large-scale campaign to reduce staff and automate processes: in the second quarter of 2018, Nordea Bank AB became the only Swedish bank to significantly reduce costs. Nordea’s success inspires other market participants.
Anything that can be automated will be automated.
The Swedish banking sector is undergoing major changes. At the end of 2017, the head of the Swedish bank Nordea Bank, Casper von Koskull announced his intention to automate maximum processes and cut 6,000 employees. They called it the only way to remain competitive in the future, when automation and robots can solve a huge number of tasks for people: from asset management to answering customer calls.
“They say that automation occurs only in personal banking. But there are elements of automation in investment banking, in corporate banking, in liquidity management, and in operations with currencies. You need to watch how these processes are automated and where human intervention is required less "- quoted by Casper von Koskulla Vesti.Finans.
Less Handwork - More Profit
Changes in Nordea quickly began to give fruit. Bloomberg calculated: compared to the previous year, the total expenses of the bank in the second quarter of 2018 decreased by 11%, while the number of jobs decreased by 8%. Cost reduction was provided by a 31 percent annual increase in operating profit, which was also the best result among the major banks in Sweden.
Thanks to high results, Nordea’s automation costs can pay off as early as next year. Competitor banks that previously criticized Nordea, recognize that the key to success is the addition of technology. Competitors are not in a hurry with layoffs, but nevertheless, the automation race has already begun: banks have become more active in hiring IT specialists and data experts.
Fintech development will change the labor market
According to the forecast of consulting company Accenture by 2022, the use of artificial intelligence will allow banks to increase revenue by more than 30%. In such conditions, experts in the field of fintech will be in demand, and professions, implying work on the algorithm, will begin to disappear. For example, tellers and underwriters, whose activities, according to Accenture, can be automated by more than 97%.
With the position of the Swedish Nordea, which assumes that within ten years the bank will need only half of the existing employees, other large market players agree. Strategies of such holdings as UBS and Citigroup contain clauses about the replacement by artificial intelligence of 30% of people in a five-ten-year perspective. The head of the Savings Bank at the World Economic Forum in Davos talked about the possible double reduction of jobs by 2025.
At the same time, the Financial Times magazine, investigatedthe use of artificial intelligence in the 30 largest banks in the world, reports that 7 respondents reported only possible dismissals of employees, and another 6 plan less than 20 percent staff reduction. The study emphasizes that despite the fact that banks hire large development teams, automation is still concentrated mainly in risk management and the front offices of banks.
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