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How Labor-Saving Automation Is Taking Over Finance Jobs
Business Mar 07, 2019
Cryptocurrencies are becoming more widely used. - Courtesy photo
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Cryptocurrencies are becoming more widely used. – Courtesy photo
Digital disruption is now a reality, and it’s upsetting the finance sector. Widespread automation of digital systems threatens hundreds of thousands of jobs in the industry. This disruption means banks and other financial institutions are battling survival, if the rise of digital automation is anything to go by.
But Ralph Hamers, chief executive of ING Group, Dutch multinational banking and financial service, begs to differ. He says employment in the finance sector will not be affected with widespread automation because people in finance perform different jobs.
As more and more banks across the world are digitizing operations, it’s likely they will shed workers and finance jobs are expected to be lost over the next ten years.
It is apparent the finance industry is grappling with fears of automation systems taking over their jobs, much like robots have taken over the place of factory workers for years. So how is this happening? How is technology exactly taking over the finance sector? Here’s how.
The success of digital payment services
You can’t deny that digital payment systems have transformed how transactions are carried out, and how money is transacted across businesses. Its success is magnanimous and can’t be ignored.
Take for example the case of e-commerce giant Alibaba. It runs a digital payment system, Ant Financial, which boasts a record 500 million customers worldwide. It’s a force to reckon with. Banks are envious of these numbers, they must be. This figure is almost ten times more customers of any bank in the world.
In any case, banks would kill to acquire the level of customers’ Alibaba commands in its digital payment system. Not just for the numbers but also for the prime access of customer’s data to help create even enhance great customer experiences in the future.
This is possible if banks join the bandwagon and employ the use of labor-saving automation in the form of digital payment systems. Because, honestly, traditional financial institutions cannot compete with the success of digital payment services.
Enter crypto-currencies
Financial organizations never thought cryptocurrencies such as bitcoin will survive the market. Yet digital currency has completely changed the game. Crypto-currencies have changed how people think of money, and now traditional financial institutions are at a crossroad, whether to invest on them or not.
But to survive they have to embrace digital currency. At first, crypto-currency was deemed a short-lived fad or something that will wither with time but that has not happened since. Blockchain technology is now a reality and most banks are looking to invest in it.
According to research, 80 percent of banks are relying on blockchain technology to increase their revenue in the future. You cannot overstate the number of profits banks and other traditional institutions stand to gain when they take advantage of the use of labor-saving automation.
Prediction of outcome and data check decisions
Technology is powerful and the finance industry understands what it’s capable of in regard to increasing future sales and providing insights on customer’s database.
Through aiding in the prediction of future outcomes and data check decisions, technology has helped banks and other financial organizations better understand the stock market.
Also, help them find ways on how they can invest and also lend to customers. In essence, technology will influence the banking system. More institutions are racing to employ the use of technology to enhance financial services including AI (artificial intelligence), voice recognition, cloud computing, etc.
Replacement of human workers
Technological advancements in the digital payment systems are not only replacing human workers in the finance sector but also instigating major job losses. According to major financial forums, they dab this replacement of human workers as “the fourth industrial revolution”.
Automation and technology have no doubt disrupted the finance industry globally and more banks and other traditional financial institution are expected to lose most of their workers over the next decade as they digitized operations. According to Citigroup, it is predicted over 1.7 million finance jobs will be lost.
Automated financial systems are slated to take over the finance industry, and this is already happening. It is no doubt, then, banks have no choice but to embrace technology not only to hit high numbers in sales but also to improve customer service in the future. Because technology is revolutionizing how we view the banking world and money transactions as well.
Is labor-saving automation the future of finance?
Analysts agree to this, if the rise of digital automation systems between 2014 and 2015 is anything to go by. Look at Wall Street, ‘robot-advisors’ and software have taken over jobs of many financial analysts.
It is stipulated that in the next decade, in the U.S. alone over 40 percent of jobs will be lost to labor-saving automation systems, and 54 percent of this lost jobs in America will primarily emanate from the finance sector alone. Suffice it to say, the finance industry will be hard hit when technology takes over human workers.
This is not just experienced in certain countries of the world like America; other countries too are also reportedly introducing digital automation systems into the workplace. And this has adversely affected the banking and finance industry.
Why? Because most of the banking operations are easy to digitize, such as cash deposits, updating passbooks and other systems created on processing information. It is no surprise traditional financial institutions bear the brunt of not adopting technology to automate their information processing systems.
You cannot ignore the dominance of digital automation in financial institutions. For instance, JP Morgan improved its loan services thanks to the use of artificial intelligence (AI) systems that helped the bank lessen or reduce the loan reviewing process. Even many private lenders and online financial services like LendUp or Realistic Loans are using the same AI technology to evaluate consumer profiles, their repaying capacity and other financial terms to make an informed decision while lending. Embracing labor-saving automation will have a significant impact in how banks interact with its customers in general.
Artificial intelligence is also taking over the investment industry. Unlike traditional statistical tools which many financial analysts have been using to analyze investment data, AI not only learns but also thinks of ways to advance and create better investment algorithms that will help banks to evaluate investment deals and reduce the time it takes to quantify them.
Digital distraction in the finance sector, according to Barclays Bank head Anthony Jenkins, will by design face-off half of the employees in the finance industry, and make them redundant in the next decade. To put it another way, the world will bid goodbye to funding managers and other financial-service employees.
Conclusion
It is not clear whether labor-saving automation will be a huge plus for traditional financial institutions and organizations. It is still believed that the finance sector requires the involvement of human factors, which favors customer experience more than technology does. It is argued that financial institutions and banks alike entirely replace the human factor especially when ‘robots’ malfunction or go rogue.
However, there are risks involved when the banking systems do not embrace technology in the form of digital payment systems and automation, which saves time and it is cheap. It is not possible for humans to operate at great speeds than thousands of computers can, so it is imperative for the finance sector as well as other traditional financial institutions to embrace the future that is technology in this digital age.
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