Many market analysts believe so. Investments in automated portfolios rose 210% between 2014 and 2015, according to the research firm Aite Group. Robots have already taken over Wall Street, as hundreds of financial analysts are being replaced with software or robo-advisors. In the US, claims a 2013 paper by two Oxford academics, 47% percent of jobs are at “high risk” of being automated within the next 20 years – 54% of lost jobs will be in finance.
This is not just an American phenomenon. Indian banks, too, have reported a 7% decline in head count for two quarters in a row due to the introduction of robots in the workplace. Perhaps this is unsurprising. After all, the banking and finance industry is principally built on processing information, and some of its key operations, like passbook updating or cash deposit, are already highly digitised.
Now, banks and financial institutions are rapidly adopting a new generation of Artificial Intelligence-enabled technology (AI) to automate financial tasks usually carried out by humans, like operations, wealth management, algorithmic trading and risk management. For instance, JP Morgan’s Contract Intelligence, or COIN, program, which runs on a machine learning system, helped the bank shorten the time it takes to review loan documents and decrease the number of loan-servicing mistakes.
Such is the growing dominance of AI in the banking sector that, Accenture predicts, within the next three years it will become the primary way banks interact with their customers. AI would enable more simple user interfaces, their 2017 report notes, which would help banks create a more human-like customer experience. Customers at Royal Bank of Scotland and NatWest, for instance, may soon be interacting with customers with the help of a virtual chatbot named Luvo. Luvo, which was designed using IBM Watson technology, can understand and learn from human interactions, ultimately making the flesh-and-blood workforce redundant.
Meanwhile, HDFC, one of India’s largest private-sector banks, has launched Eva. India’s first AI-based banking chatbot can assimilate knowledge from thousands of sources and provide answers in simple language in less than 0.4 seconds. At HFDC Eva joins Ira, the bank’s first humanoid branch assistant. AI has also made inroads in the investment industry, where, many financial analysts say, a sophisticated trading machine capable of learning and thinking will eventually make today’s most advanced and complex investment algorithms look primitive.
Advisory bots are allowing companies to evaluate deals, investments, and strategy in a fraction of the time it takes today’s quantitative analysts to do so using traditional statistical tools. Former Barclays head Antony Jenkins, who called the disruptive automation of banking sector an “Uber moment”, predicts that technology will make fully half of all bank branches and financial-services employees across the globe redundant within ten years.
Goodbye, human fund managers.