Citigroup: AI Could Displace More Than 50% Of Banking Jobs
According to the report, the banking industry could experience more AI-related job displacement than any other industry in the coming years.
In a new report that's sure to make waves, researchers from Citigroup projected a seismic shift in the banking industry fueled by artificial intelligence. By their estimate, 54% of the banking industry is vulnerable to "AI-led job displacement" in the near future.
This report acknowledged the potential for growth and innovation brought about by AI. But it also highlights the unavoidable disruption of traditional practices and the resulting displacement of workers, particularly in the short term.
According to the authors, AI applications "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."
High-Risk Sectors and AI's Profit Potential
The banking sector isn't alone in facing this AI-driven transformation. Other high-risk industries identified in the report include insurance (48%), energy (43%), and capital markets (40%).
Despite the potential for job losses, Citigroup estimates that AI adoption could boost the global banking sector's profits by a staggering $170 billion by 2028. That would put total profits at approximately $2 trillion, a 9% increase from current levels.
"The rapid adoption and impact of Gen AI across industries have been astonishing," noted David Griffiths, Chief Technology Officer at Citi. "It's clear that AI has the potential to revolutionize the banking industry and significantly improve profitability."
Citigroup's Own AI Initiatives
Citigroup is already spearheading AI implementation in the financial sector. Last year, it announced plans to deploy generative AI technology for its 40,000 developers and utilized automation to analyze extensive new capital regulations.
During a recent digital money symposium, CEO Jane Fraser outlined Citi's AI priorities, emphasizing the shift from research to practical application. The bank is actively exploring AI's potential for personalized investment recommendations and enhanced cybersecurity measures.
AI's Impact on Jobs and Reskilling
While AI's disruptive potential is clear, the report also underscores the importance of reskilling and adapting to the changing landscape. Highly automatable roles in banking include back-office functions, customer service, and analysis, while jobs requiring complex problem-solving and human interaction remain less susceptible to automation.
To navigate this transformative period, banking professionals are urged to stay informed about AI trends, acquire new skills, and embrace a growth mindset to thrive in an increasingly AI-integrated industry.
AI and Regulatory Compliance
The report also highlights the potential of AI in regulatory compliance. AI systems can monitor transactions and activities in real-time to detect potential violations, analyze vast amounts of data for client onboarding, and automate the review of new regulations. However, robust governance and ethical considerations are crucial for responsible AI adoption.
Citigroup's report paints a complex picture of AI's impact on the banking industry. While job displacement is a significant concern, the potential for increased profits and improved services is undeniable.
The bottom line: As AI continues to reshape the financial landscape, individual employees will need to find new ways to adapt and reskill.