30% of banking jobs facing automation

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Image taken from Pixabay.com, creative commons website

‘Automation’ was once a word which only struck fear into the hearts of those working on assembly lines, however it has come to mean much more than the traditional image of a robot arm constructing cars. In the last decade we have witnessed significant leaps in technology and automation. From self-checkout tills to E-tickets, the ease of use and reduced costs add up to an inevitable shift to a more mechanised world, and further developments are extending the reach of automation into previously untouched domains.

Cognitive technologies, so called due to their ability to mimic human thought, have made huge progress in recent years, and businesses are taking notice. A recent report by McKinsey & Co suggests that up to 30% of work at banks could be automated in the near future, at current levels of technology. This may create anxiety among those with aspirations to enter the illustrious industry, and with good reason. In an already saturated job market, banking and finance rank among the fiercest for competition, thanks to the high wages and glamour attached to the title ‘investment banker’. This has led to the UK banking sector seeing 135 applications per graduate position in 2013, and Goldman Sachs receiving 250,000 applications from UK students and graduates in 2016 alone. In short, there simply aren’t enough jobs to go around.

But what exactly are the roles being automated? The study identifies the next big area to face automation to be the collection and processing of data. While this may not seem like the most appealing work to do, it in fact takes up 43 percent of workers’ time in the financial sector. This means that the least affected jobs in the industry are front-office, or client facing roles, which cannot currently be automated due to the unpredictable nature of the work, and the necessity of a ‘human touch’ when working with clients. The largest hit, on the other hand, will be middle-office and finance roles, who process trades and produce profit-loss statements, and generally are composed of twice the personnel of the front-office.

Nevertheless, the news may not be all doom and gloom, as companies that have began automation of certain roles do not foresee a reduction in their workforce in the future. One such firm is JP Morgan Chase & Co, whose CEO Jamie Dimon predicted a rise in the company’s headcount in the coming years, and claimed that people are “massively overreacting” to the threat of automation. However, Dimon’s words may be too optimistic, as former president of Goldman Sachs Gary Cohn said in 2011 that technology had helped to half the number of staff on his equities team.

The wider effects of this automation have a brighter tone to them, so if you were in search of a silver lining look no further. The McKinsey study examined eight firms that had the highest reliance on an automated middle office and saw that front-office revenues rose as much as 800% per producer. This means that the financial sector, which makes up well over 10% of Britain’s GDP, could see revenues skyrocket, leading to a healthier economy. Additionally, with increased revenue flows it is likely that wages in the sector will rise, as human roles which are unable to be replaced by computers become more in demand.

Whatever the outcome will be, it’s clear that the industry is now one characterised by rapid evolution, which will need to be accounted for should you wish to excel in the field. To prepare for such a fast changing environment, industry experts advise that you diversify your marketable skill-set. Whether that means polishing your silver tongue and moving to a client facing salesman’s role, or becoming more tech-savvy in anticipation of a move to a more technical side of the industry, making yourself suited to a single role is no longer viable for the banker of the 21st century.