In a pilot project last year at Swiss bank, St. Galler Kantonal bank (SGKB), seven employees were replaced by five robots. The test was carried out when SGKB took over the private banking business of W.M Warburg Bank AG. As the two banks had different IT systems, the robots were used to transfer customer data from one IT system to the other. The robots simply took data from a field of the an excel file in one system and transferred it to the corresponding field in the other system. The robots were able to do the same work as their human counterparts but were able to work 24/7 without a break and thereby dramatically speed up the process.
At a global level, automation is expected to turn the financial industry on its head over the course of the next decade. The 2017 Digital Banking Expert Study by GFT Technologies in collaboration with market research firm, Frost & Sullivan,surveyed 285 banking professionals from small to large retail banks in eight countries – Brazil, Germany, Italy, Mexico, Spain, Switzerland, the UK and the USA. The survey showed that, overall, 83 percent of respondents saw value in automation. Brazil, the UK and Mexico led the way in terms of ascribing importance to automation while in traditionally more cautious Germany and Switzerland just a few respondents perceived automation to be a strategic priority.
With the implementation of automation, most respondents expected to see improvements across a wide range of business functions, ranging from back office functions to customer services, personal financial planning and sales. In terms of expected benefits, operational cost reductions (71 percent) and greater customer engagement (64 percent)were considered to be most important benefits.
Marika Lulay, CEO of GFT Technologies says the retail banking industry has access to vast amounts of unstructured data,such as customer information, which is currently not being used to its full extent. “By utilizing cognitive banking methods based on self-learning systems, this unstructured data can be processed and organized to generate weighted hypotheses on decision-making to service customers better and grow revenues”she says.
The financial industry is not the only sector that will be impacted by automation. A November 2017 report called “Jobs lost, jobs gained: workforce transitions in a time of automation”, by management consultancy firm, Mc Kinsey, assesses the number and types of jobs that might be created under different scenarios over the next thirteen years and compares that to work that could be displaced by automation. The analysis covers 46 countries that comprise almost 90 percent of global GDP and focuses on six countries that span income levels (China, Germany, India, Japan, Mexico, and the United States). Models were developed of potential net employment changes for more than 800 occupations, based on different scenarios for the pace of automation adoption and for future labor demand. The result of the research is not a forecast but, rather, a set of scenarios, necessarily incomplete, to serve as a guide as the world anticipates and prepares for the future of work. The results are interesting.
Benefits of automation
Automation technologies, including artificial intelligence and robotics, will generate significant benefits for users, businesses, and economies, lifting productivity and economic growth. The extent to which these technologies will displace workers will depend on the pace of their development and adoption, economic growth, and growth in demand for work. Even as it causes declines in some occupations, automation will change many more as 60 percent of occupations have at least 30 percent of constituent work activities that could be automated. It will also create new occupations that do not exist today, much as technologies of the past have done.
While about half of all work activities globally have the technical potential to be automated by adapting currently demonstrated technologies, the proportion of work actually displaced by 2030 will likely be lower, because of technical, economic, and social factors that affect adoption. Across 46 countries between almost zero and one third of work activities could be displaced by 2030, with a midpoint of 15 percent. The proportion varies widely across countries, with advanced economies more affected by automation than developing ones, reflecting higher wage rates and thus economic incentives to automate.
Major transitions lie ahead that could match or even exceed the scale of historical shifts out of agriculture and manufacturing. By 2030, 75 million to 375 million workers (3 to 14 percent of the global workforce) may need to switch occupational categories. If their transition to new jobs is slow, unemployment could rise and dampen wage growth. Moreover, all workers will need to adapt, as their occupations will evolve alongside increasingly capable machines. Some of that adaptation will require higher educational attain mentor spending more time on activities that require social and emotional skills, creativity, high-level cognitive capabilities and other skills relatively hard to automate.
Several trends could create demand for millions of jobs by 2030. These trends include caring for others in aging societies, raising energy efficiency and meeting climate challenges, producing goods and services for the expanding consuming class, especially in developing countries, and investment in technology, infrastructure, and buildings needed in all countries. Taken from another angle, growing and dynamic economies fuelled in part by technology itself will create jobs. This job growth (jobs gained) could more than offset the jobs lost to automation. However, none of this will happen by itself. It will require businesses and governments to seize opportunities to boost job creation and for labor markets to function well.
The report concludes that while there may be enough demand to maintain full employment to 2030 under most scenarios, the transitions will be challenging – matching or even exceeding the scale of shifts out of agriculture and manufacturing that took place in the past. The report suggests that in about 60 per cent of jobs, at least one third of activities could be automated. It estimates that between 400 million and 800 million individuals around the world could be displaced by automation and will need to find new jobs by 2030. While new jobs will be available, people may need to learn new skills to get them.