Many experts predict millions of job losses globally
Automation is having a significant impact on the financial sector. With predictions of massive finance sector job losses as a result of technological innovation, many finance professionals are understandably apprehensive regarding their future. However, the reality of what automation in finance represents isn't quite so straightforward. This article explains how technology is set to change finance and how it may impact financial professionals.
In this article you will learn:
Expert predictions of how automation will affect the finance sector
What these changes will mean for financial professionals
How automation may actually create jobs
Automation will primarily impact repetitive-task roles
An Accenture report details how intelligent automation "is likely to affect most if not all parts of the FS (financial services) organization." According to this report, 77% of senior financial services executives have increased investment in automation over the last two years and expect to continue to do so over the next three. However, while many economists have made doomsday predictions that up to 80 million jobs in the U.S. will be replaced, and 15 million in the U.K., Bank of England governor Mark Carney has said that predictions of vast changes are "overdone", because "it will not always make sense to replace people with machines."
Carney also took issue with how economists have reached such conclusions, arguing that automation may replace some jobs, but for many it will merely change how financial professionals work. New research suggests that around 10% of jobs are directly under threat from automation, rather than the much larger numbers often spoken about.
What is largely agreed among finance sector commentators is that automation is likely to increasingly take over the roles of important yet time-consuming tasks. These include digital processes, client on-boarding, and regulatory compliance and reporting. In some cases this may well mean entire jobs that people currently perform. For instance, a report by Deloitte and Oxford University predicts that it is 95% likely that the chartered accountant profession, in its current form, will be completely wiped out by automation within 20 years.
However, for other roles, automation will likely act as a sort of digital assistant, performing tasks such as data analysis, financial market forecasting, and computational algorithms. A study by The Boston Consulting Group and the China Development Research Foundation found that this type of automation-led innovation would lead to 45% efficiency gains. The result is that professionals in certain positions will benefit from this freed-up time to focus on other, perhaps more demanding, tasks.
Automation will likely generate more jobs that it eliminates
The first wave of automation is set to replace jobs that require repetition of tasks such as tellers, call centre employees, and data entry roles. Some financial observers point out that, rather than focusing on automation-caused disruption, financial professionals can view this as a process of change and adaptation. For instance, many tasks or jobs that will become automated will likely require monitoring from professionals skilled in the same role.
Elsewhere, new types of jobs will flourish, such as technicians and engineers. A study by recruiter Robert Half found that 46% of Australian CFOs actually plan on expanding their permanent employee numbers in order to facilitate automation integration, while 36% intend on hiring temporary staff to cover their manpower needs.
If a specific role is under threat such as the aforementioned case of chartered accountants, it need not mean that the role will become extinct. Rather, accountants may be able to use automation processes to generate value for their firms, while they can expand their business services into other related, complementary verticals, such as financial advisory.
There's no need for financial professionals to panic
Automation will likely replace more basic financial roles, while it may also force certain professionals to be proactive in adapting their skill sets to thrive alongside automation. For many other jobs, it will probably enrich output by taking charge of rote and basic tasks, rather than replace humans. Implementation and maintenance of automation processes is likely to also create jobs.
Predictions of how these changes will affect finance vary so much because, quite frankly, nobody is certain of what will happen. As has occurred in so many industries before, doomsday predictions have been proven wrong. Only 10 years ago, for instance, the proverbial death knell was sounded for bookstores because of the advent of e-reader devices, but they have actually enjoyed sales booms. The next three years will be particularly revealing for how automation will impact finance professionals.
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