4 ways AI will impact the
financial job market
The transformative impact of artificial intelligence (AI) on every industry is
indisputable, as is its effect on the labour market. Will AI benefit the labour
market over the next decade and beyond, or will it change it and replace
humans?
The continuous interaction and integration of data, algorithms and use cases
are driving AI development. AI has cut positions, broken the bottleneck of
human efficiency, reduced standardized and repetitive work, changed the
nature of work and enhanced work efficiency. At the same time, it has created
new jobs.
To be more specific, AI technology will change the business world in three
aspects: automation, intelligence and creation. In the financial sector, it will
make some jobs redundant, while at the same time increasing
efficiency andcreating jobs.
1. Opportunities and challenges in the new wave of AI
In the new wave of AI, opportunities and challenges exist at the same time.
On the positive side, AI could increase automation, support intelligent analysis
and decision-making, and create new business models and industries. But AI
also carries a series of risks.
In the financial industry, potential risks include micro-financial risk and macro-
financial risk. The former could influence the stability of markets, causing
turmoil. The latter could trigger risk around market concentration, market
loopholes, connection and technology.
Language and vision have been the two major breakthroughs in AI so far,
according to research from the BCG Henderson Institute. Machine vision and
speech recognition give machines cognitive skills, allowing AI to be applied in
real-world contexts, which will change all aspects of society in the future.
The research also reveals that industry users understand AI from three
dimensions: data, processes and actions. AI improves workflows by
processing structured data as well as unstructured language and image
information to deliver new products and services, and provide data or physical
feedback.
2. Rebuilding the financial industry value chain: automation, intelligence
and innovation
Deep learning and the spread of big data have stimulated the new wave of AI,
which has driven breakthroughs in a number of application-layer technologies,
fundamentally changing the business world.
This profound change could be defined by three aspects: increasing
automation, supporting intelligent analysis and decision-making, and creating
new business models and industries.
As AI technology has developed, it has been applied widely to the
financial industry and has gradually matured. It has driven profound
changes in banking, insurance and capital markets. BCG has worked
with industry experts to analyze how AI is driving automation, smart
analysis and decision-making, uncovering new models and new
products. We have provided examples of important types of AI
applications in various industries. 3. Restructuring the financial labour
market: replacement, improvement and creation
Based on the applications of AI in the different business value chains of the
financial sector, we see three major impacts that AI is having on the financial
job market: job cuts, increased efficiency and job creation. Of these three
areas, job cuts and increased efficiency will impact existing positions, while
job creation reflects the incremental potential impact of AI on the job market.
The further distinction between job cuts and increased efficiency is based on a
judgment as to whether the manual work replaced by AI can be considered
the core value-creating activity of the position. That is to say, if the core value
of a job post can be created by AI rather than by manual work, then the
position can be eliminated due to AI. If AI cannot replace the core value-
creation activity of a position - in other words it is still dependent on manual
work and AI is only playing an auxiliary role for the completion of non-core
tasks - then this is considered an increase in efficiency.
We estimate that by 2027, 23% of the jobs in China’s financial sector will
either be cut by AI or will be transformed into new positions. The remaining
77% of jobs will not be replaced, but the efficiency of these positions will
increase. The jobs that will be replaced by AI mainly consist of standardized
and repetitive tasks. We estimate that by 2027, about 2.3 million people will
be affected - 23% of the total workforce in the financial sector. The remaining
7.6 million people - those who need to solve complex problems and respond
to emotional interactions or random changes in the environment - will not be
replaced by AI. Instead, they will be able to increase their working efficiency
by using AI.
4. Changes in employment structure in the AI era: shifting demand
structure and diverse skill requirements
Changes in employment demand and talent requirements in the AI era have
been more evident in developed countries and leading companies. Taking the
US as an example, the technological changes over the past few decades -
particularly the rapid growth of computer processing speed and capabilities,
and the automation of everyday tasks - have resulted in a decrease in the
time spent on manual and cognitive tasks, especially by production line and
operations workers and office clerks. At the same time, demand has
continued to grow for professional service talent, with an emphasis on
communications, logic and creation, and technical talent dealing with
computer technologies.
In China, we have also observed similar changes in employment demand and
talent requirements. In this wave of technological progress, posts relying on
creativity and communications will continue to grow. At present, AI technology
in China is still in an introductory stage, so changes in employment demand in
the AI field are limited, and are mainly reflected in a demand for basic
technical talent. From a recruitment perspective, companies are placing
greater emphasis on technical skills, particularly ability in basic AI.
As AI technology develops, the demand for talent is also changing. AI is
gradually replacing manual labour in repetitive, highly standardized job
activities that can be carried out using computer software. Therefore demand
for these positions has been in decline. However, there are some positions
that will not be replaced by AI over the next decade.
The first change will be an increased demand for talents who are skilled in AI
technologies, both on a technical and application level, but who also have soft
skills. In addition to generating demand for talent, AI will also affect the overall
labour market. Activities that can be replaced by artificial intelligence are
those that can be automated. From this aspect, developments in AI will
amplify the soft skills of talented people and make them applicable to a
broader range of industries. It will also increase requirements for creativity,
emotional communication and complex problem-solving.
In summary, although the advent of the AI age creates a “struggle” between
humans and machines and replaces jobs, it also creates opportunities for new
talents who can create, apply and optimize AI technologies. It requires
workers with strong communications abilities who can apply their high-level
technical achievements to production and daily life.
