It is now evident that AI is becoming more valuable across various industries.
According to IHS Markit, a global business information company, the value of artificial intelligence in the banking industry will reach $300 billion by 2020.
However, artificial intelligence in the banking industry will affect millions of financial service and banking jobs in the next decade.
Artificial intelligence is currently being utilized in numerous ways in banking institutions across the globe, from front to back office to the data analytics that supports multiple banking decisions.
Many banking institutions use the technology in spotting anomalies or patterns that might show fraudulent activity as well as in detecting fraud.
For customers, virtual personal assistants and chatbots utilize natural language processing (NLP) in trying to solve a customer’s issue without the presence of human staff.
Just like in the retail space, artificial intelligence is developing personalized communications and experiences in banking.
The growth of robotic process automation means that additional administrative activities are being executed more efficiently compared to what humans can do.
AI software bots are also acting as investment bankers, which have seen numerous banking institutions running programs that not only react to changes in the market but also carry out trades.
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“The innovative capabilities AI will bring to financial services will be transformative,” said Don Tait, principal analyst at IHS Markit.
“AI is poised to challenge and blur our concepts of computing and the ‘natural’ human. This sea change will require both businesses and governments to develop expansive foresight and critical understanding of the full effects of digitization and emerging technologies.”
North America is the world’s King of AI Banking
IHS Markit’s $300 billion prediction marks a 259 percent increment from the 2018 business value that stood at $4.1 billion.
North America is projected to become the largest market, rising from last year’s value of $14.7 billion to approximately $79 billion by 2030.
Nonetheless, robust AI in banking growth is anticipated from all over the world, particularly from 2024 to 2030.
The Asia Pacific, for instance, is now the second biggest area for applying artificial intelligence in banking.
IHS Markit looks forward to the region overtaking North America for artificial intelligence (AI) in the banking industry by 2030, with the value forecasted to hit $98.6 billion.
“Countries like China, Japan, South Korea, Hong Kong, and Singapore are likely to drive the demand for AI within the banking sector over the next ten years,” said Tait.
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Job Losses due to the growth of AI in the Banking Industry
A lot of coverage has been dedicated to the impact that automation and artificial intelligence are expected to have on jobs.
In the United Kingdom, this could affect about 500,000 bank employees by 2030.
In the United States, that particular figure is predicted to be 1.3 million.
Across the globe, there could be millions of financial service and banking jobs affected by artificial intelligence in banking over the coming decade.
“Banking employees potentially impacted by the introduction of AI include tellers, customer service reps, loan interviewers and clerks, financial managers, compliance officers, and loan officers,” Tait said.
“All in all, AI technology will reconfigure the financial industry’s structure, making the banking sector more humane and intelligent.”