Thousands of Jobs Under Threat as Banks Embrace Artificial Intelligence

New technologies mean that banks could make vast savings in compliance but at a risk to jobs.

Industry experts have warned that thousands of jobs could be put at risk as the world’s largest banks embrace artificial intelligence systems to help meet ever-growing regulatory demands, according to a report in the Financial Times today.

To unlock the Asian market, register now to the iFX EXPO in Hong Kong

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

Compliance

In an interview with the FT, Richard Lumb, head of financial services at Accenture, said that new technologies mean that banks could make vast savings in compliance. He also estimated that “thousands of roles” in the banks’ internal policing could be replaced by automated systems.

He added: “We are seeing work with clients today which is very much around big data and robotic process automation, where in compliance – take anti-money laundering – you can take out thousands of roles. That is coming quite quickly now and that will sweep across the industry.”

He highlighted the fact that many of the jobs created by banks in recent years for compiling and checking data on customers and transactions had already been moved offshore to lower-cost countries. In the next wave of automation they will simply disappear.

Suggested articles

FBS Receives Best Forex Broker Europe 2019 Award by The European MagazineGo to article >>

“Companies have really thrown bodies at this to deal with the demands of the regulators. They have had no option. But now we are shifting from a revolution of labour arbitrage and offshore to a revolution of automation around this.”

According to Citigroup estimates, the largest banks, including JPMorgan and HSBC, have doubled the number of people they employ to handle compliance and regulation which is now estimated as costing the banking industry $270 billion a year.

A report entitled “digital disruption” produced by Citi this week also said there was a “huge cost take-out opportunity for financial institutions” from the fast-growing area of regulatory technology (regtech).

Many banks have heavily invested in this area in response to the crackdown by regulators following the financial crisis. European and US banks have paid more than $150 billion in litigation and conduct charges since 2011, according to Citi’s estimations.

KYC

Citi concluded that banks would ultimately benefit from pooling their resources in compliance. “Over the longer term, a nationwide know your customer (KYC) utility could be beneficial to the whole of society, and many regulators and governments are working towards this ideal.”

Got a news tip? Let Us Know