A. SREENIVASA REDDY (ABU DHABI)
Generative artificial intelligence (AI) technology could bring about paradigmatic changes in banking, potentially rendering a majority of current industry jobs redundant, according to a report issued by Citibank Group.
In a report titled “AI in Finance: Bot, Bank and Beyond”, the Citibank group took a comprehensive view of the present situation on the adoption of AI and plotted its various possibilities in the banking industry.
In sweeping findings, the Citigroup report said 54% of jobs in the current banking industry are in risk of becoming redundant and another 12% are poised to undergo major transformation after the adoption of generative A1 technologies.
Will there be a fewer people working in the finance sector post-AI adoption? It is unlikely, says the report, which adds: “Historically technology adoption has not led to reduction of workforce but has changed the workforce mix over time. New jobs are constantly created.”
The report highlights that while AI adoption may decrease low-skilled roles in operations and technology, roles in governance and compliance are expected to expand. For instance, the number of compliance officers in the US economy tripled from 2000 to 2023. “AI talent availability may pose a challenge for banks and others; the talent wars are ongoing. Human expertise will remain in demand,” the report adds.
The report said the generative AI will be at the forefront of driving productivity and boosting profits. According to the report’s survey, AI adoption could potentially increase banking profits by $170 billion by 2028, bringing total industry profits close to $2 trillion.
While the report was upbeat about the profit impact of AI, it cautioned about the implementation timelines, talent costs, risk of increased competition, rising client expectations, and the costs associated with increased AI-generated activity.
The report was prepared under the banner of Citi GPS, which stands for Citi Global Perspectives and Solutions. It is a thought leadership programme which produces reports on key economic trends and issues. It seeks to generate knowledge and perspectives that help banking industry and customers to make informed choices on business issues.
The latest report issued on AI and banking seeks to help banks and customers to navigate the business landscape dominated by automative technologies and AI bots.
The report says: “AI bots have the potential to transform entire economies, changing the way we live and work. They create new opportunities for growth and innovation, often improving our overall quality of life. They also destroy existing ways of doing things. And as such they also create losers, especially in the short term.”
Further, the report draws parallels with historical technological revolutions: “The steam engine commoditised production and physical movement, powering the industrial revolution. More recently, the Internet revolutionised communication and ushered in the age of information. Similarly, AI may commoditise human intelligence, including analysis, decision making and content creation.”
Mapping the possible nature of change in the banking sector, the report said: “Finance, in a world of AI-powered agents, bots and beyond, will likely face change across the board: in terms of market share, employment, and client experience. In the medium term, by 2030 or before, AI-powered bots will play an increasing role in banking and finance.”
In a statement issued with the report, David Griffiths, Citi’s Chief Technology Officer, said: “The pace of adoption and impact of generative AI across industries has been astounding as it becomes clear that it has the potential to revolutionise the banking industry and improve profitability.”
Referring to specific gains to be made by banks, the report notes: “AI could drive productivity gains for banks by automating routine tasks, streamlining operations, and freeing up employees to focus on higher value activities. GenAI will likely have a big impact on internal facing tasks such as content and information management, coding, and software.”
The report also highlighted some dangers of AI-driven banking including concerns over data security, regulatory compliance, and ethical considerations. The report points out that “AI models are known to hallucinate and create information that does not exist, organisations run the risk of AI chatbots going fully autonomous and negatively affecting the business financially or its reputation”.
The banks in the new era will face clients who are armed with data power given by AI bots and could have a difficulty meeting their heightened expectations, the report said.
Shameek Kundu, an experienced Chief Data Officer, says biggest outcome of AI revolution could be the birth of non-human customers. As early as 2030, clients will deploy AI agents and bots to deal with bankers, thereby increasing their challenges by manifold.
Regarding the players in the AI-driven banking system, the report said: “AI is likely to be adopted faster by digitally native, cloud-based firms, such as FinTechs and BigTechs, with agile incumbent banks as fast followers.”
In contrast, many old-style banks, who are weighed down by legacy administrations and debt, may be slow to adapt to AI and are likely to lose market share to more agile and digitally native players, the report adds.