How is AI changing the banking world? According to a report by Bloomberg Intelligence, international banks envision a future with a smaller workforce and higher profits, thanks to artificial intelligence. However, Bloomberg Intelligence analyst Tomasz Noetzel believes AI will not completely replace jobs but rather transform the workforce.
According to the report, Bloomberg Intelligence surveyed technology and information officers from 93 global banks about AI’s role. They estimated that AI could eliminate about three percent of existing jobs in the financial sector over the next three to five years, which translates to around 200,000 jobs.
Many jobs involving routine and repetitive tasks are at risk, such as customer inquiries handled by chatbots and automated background processes. Despite these potential reductions in workforce, the report suggests that AI could lead to increased profits. The surveyed executives believe that AI could boost banks’ pre-tax profits by 17 percent by 2027, adding up to 180 billion US dollars.
These figures are not calculated forecasts but rather the opinions of tech industry leaders. There were differing views among executives from major banks like JPMorgan, Goldman Sachs, and Citigroup, with some predicting a reduction in jobs by five to ten percent, while the overall estimate was three percent.
In addition to workforce size, the survey also focused on financial growth. The respondents anticipated significant profit growth due to AI implementation. The expected increase in profits highlights the potential economic benefits AI could bring to the banking sector.
The introduction of AI in banking is seen as a transformative force, reshaping how banks operate and interact with customers. AI technologies, such as machine learning and data analytics, are expected to enhance efficiency and decision-making processes. This transformation could lead to improved customer service, streamlined operations, and better risk management.
Moreover, AI could enable banks to offer more personalized services to customers by analyzing vast amounts of data to understand customer needs and preferences. This could result in more tailored financial products and services, enhancing customer satisfaction and loyalty.
Despite the potential benefits, the adoption of AI in banking also raises concerns about job displacement and data privacy. As banks increasingly rely on AI, there is a need to address these challenges to ensure a balance between technological advancement and ethical considerations.
Overall, AI is poised to play a significant role in the future of banking, offering opportunities for growth and innovation while also presenting challenges that need to be carefully managed. The banking industry must navigate this evolving landscape to harness the full potential of AI while safeguarding the interests of employees and customers alike.