AI is coming for many kinds of jobs in the banking sector

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Last year proved to be a challenging period for the global banking system, largely due to a substantial banking crisis that predominantly impacted the U.S. and Europe. This crisis stemmed from the collapse of Silicon Valley Bank, subsequently affecting institutions like Credit Suisse and other financial entities. Due to a series of bankruptcies, the total assets of the failed banks amounted to $548 billion, which is the largest figure in the entire history reached in one year — and is even 46% higher than in 2008. 

The 2023 bank collapse has once again underlined the pressing need for change. In order to embrace it, the attention of the banking sector has once again turned to technology. The banking, insurance and finance sectors have consistently been at the forefront of adopting artificial intelligence-driven technologies in their operations and are expected to continue this trend. 

Furthermore, the financial sector has actively put into effect the so-called new wave of AI — generative AI. Thus, the market size of generative AI in banking and finance in the U.S. reached a valuation of $244 million in 2023 and is projected to grow to $324 million by the end of 2024. 

The current wave of interest in AI caused by the successes of the last few years is actually far from being the first in the history of the development of neural network technologies. There have always been periods of high expectations and enthusiasm, which were replaced by disappointment and loss of interest. Given that, the banking sector is now undergoing again the trend of active AI and other technologies implementation.

Although, there are operational tasks in the field of finance that will never be solved by AI, as they have already reached optimal solutions, there are also other tasks that would be very productive to automate using AI. However, the technology is still quite raw, and innovation will most likely happen not this year but in the near future. Let's delve into some technologies that are currently advancing banking and have future potential. 

The main field where AI can present itself in the most favorable manner is credit scoring. The effectiveness of AI in determining the creditworthiness of individuals has been demonstrated. Special models trained for predicting payment behavior offer more nuanced insights than traditional assessments and help banks in decision-making based on full information. Additionally, AI-driven credit scoring mitigates risks while increasing the number of customers by processing more information.

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Another aspect that can be easily optimized by AI is electronic document management. Along with machine learning, AI allows better performance and accuracy while operating with documents and other types of data. Besides processing, AI has proved its potency in comparing documents, identifying differences and facilitating international performance by translation. 

Despite this, the expectations of breakthroughs made by using AI technologies might be quite overrated. This implies the absence of significant changes this year. Nevertheless, in some areas, we will see more noteworthy progress.

This year, the industry can anticipate personnel restructuring. First of all, the number of vacancies in analytics will begin to decrease. Mostly, it will concern junior and middle specialists. In the past, conducting fundamental analysis required a considerable number of analysts, each specializing in a specific narrow field. 

With the help of AI, the need for an equivalent level of human resources to achieve the same objectives was notably reduced. Today, ChatGPT (or a similar LLM network) can generate a deep and high-quality fundamental analysis of a company, a commodity market and other sectors much faster than a human analyst. In spite of this shift, the tendency does not apply to heads of departments. On the contrary, demand for highly qualified senior analysts and other employees is expected to increase this year.

Another area of change that is taking place in the banking sector — the ongoing replacement of human personnel with AI agents, in particular, within call centers — will continue. This improvement has the potential to significantly reduce costs, mainly on customer service. It is predicted that AI will take jobs away from 1.2 million people working in banking by 2030.

However, consumers often terminate phone calls when they realize that they are interacting with a robot. Addressing this issue requires the development of robots capable of engaging with people in a humanlike manner and providing assistance without causing irritation. But it seems that the process has just begun, and tangible results for banks and other financial entities will be expected only by 2025-26.

This year, the most essential trend that the banking sector is looking forward to is client-centricity. To focus on designing client-oriented financial products, banks will have to optimize costs by reconsidering their staff efficiency. Moreover, this also signifies human capital reviews, especially of lower-tier personnel, who can be partially replaced in the near future.