It’s no secret that artificial intelligence (AI) is becoming increasingly valuable across all industries. For the banking industry, the value of AI is expected to be worth $300bn by 2030, according to global business information firm IHS Markit.
However, that could come at a human cost, with AI in banking expected to affect tens of millions of banking and financial service jobs in the coming decade.
AI is already being used in myriad ways in banks around the world, from front office to back office to the data analytics that underpins countless banking decisions.
The technology is employed by many banks to detecting fraud, spotting patterns or anomalies that might indicate illegal activity.
For customers, chatbots and virtual personal assistants use natural language processing to try and solve a customer’s query without the need for human staff. As with retail, AI is creating personalised experiences and communications in banking.
And the rise of robotic process automation (RPA) means that more and more administrative tasks are being carried out more efficiently than humans by software bots.
Software bots are playing investment banker too, with many banks running programs that react to the market and carry out trades.
“The innovative capabilities AI will bring to financial services will be transformative,” said Don Tait, principal analyst at IHS Markit.
“AI is poised to challenge and blur our concepts of computing and the ‘natural’ human. This sea change will require both businesses and governments to develop expansive foresight and critical understanding of the full effects of digitization and emerging technologies.”
North America is AI banking king, but for how long?
IHS Markit’s $300bn forecast is a 259% increase from AI in banking’s business value in 2018, which stood at $41.1bn.
North America is expected to be the biggest market, jumping from a 2018 value of $14.7bn to nearly $79bn by 2030.
However, strong AI in banking growth is expected from the rest of the world from 2024 to 2030. Asia Pacific, for example, is currently the second largest region for employing AI in banking. IHS Markit expects the region to overtake North America for AI in banking by 2030, with value projected at $98.6bn.
“Countries like China, Japan, South Korea, Hong Kong and Singapore are likely to drive the demand for AI within the banking sector over the next ten years,” said Tait.
Job losses from AI in banking
Much coverage has been devoted to the disruption AI and automation will have on jobs.
In the UK that could be as high as 500,000 bank workers by 2030. In the US that figure is projected to be 1.3 million. Globally, there could be tens of millions of banking and financial service jobs affected by AI in banking over the next ten years.
“Banking employees potentially impacted by the introduction of AI includes tellers, customer service reps, loan interviewers and clerks, financial managers, compliance officers and loan officers,” Tait said.
“All in all, AI technology will reconfigure the financial industry’s structure, making the banking sector more humane and intelligent.”