Up to 230,000 employees in capital markets are set to be replaced by artificial intelligence agents over the next eight years, according to research by consultancy Opimas.
The consultancy estimates a 28% improvement in financial institutions’ cost-to-income ratio by 2025 as they automate routine processes currently performed by employees.
In terms of job losses, the asset management industry will shrink most, with around 90,000 people being replaced by machines. The firm estimates that a third of the jobs lost to machines will be replaced by technology and data providers serving the industry’s new needs, creating close to 30,000 new jobs at technology and data providers.
The uptick in spending on AI-related technologies - including robotic process automation, machine learning, and cognitive analytics - is already evident, with $1.5 billion expected to be allocated across the banking industry over the next year, rising 75% to $2.8 billion by 2021.
Bank investment in the technology is likely to reinforce current power structures, believes Opimas, creating a formidable barrier to entry for new startups.
"Since they need access to vast amounts of data to efficiently train an AI system, banks have a clear advantage over potential new entrants because they can leverage their huge internal data sets," says the report. "Once financial firms revamp their business operations using AI technologies, they will raise the barriers to entry in their market so high that it will be nearly impossible for newcomers to compete."