AI continues to replace human labor, and the finance industry provides no exception. Outside of finance, we see automation’s effect everywhere, from the supermarket checkout line to the airport check-in process. The manufacturing industry needs fewer and fewer human workers, who are slower than AI machines, require frequent breaks, and demand paychecks. AI applications work 24/7/365 for free, minus the purchase price and upkeep.
Many finance jobs will soon be done by AI:
When it comes to labor, the equation is simple. When AI becomes more cost-effective than a human or group of humans, that human or group is replaced. As much as our economy is based on employment, it is also based on profit. Without profits, there are no jobs. Up until now, without employment, there have also been no profits. Many fear AI could change this dynamic. For the first time, profits may be possible without employment, or, at least, with a vast minority or even a majority of people jobless.
No one is sure how this will impact the world economy. Some believe enough new jobs will be invented to offset the lost jobs. Others champion a universal basic income or other social policies, which will keep the demand side of the economy rolling despite high jobless rates. AI’s economic impact is crucial for the finance industry in several ways.
First, like every other industry that faces disruption from AI, the question of the future job outlook for finance professionals looms large. Replacement of humans through AI innovations also promises to change how customers receive service. Finally, the question of AI’s impact on the economy has become central to financial planning and investing.
Many tasks required by financial enterprises are a natural fit for AI, so there will be changes in how jobs in finance are done and a replacement of a certain number of humans. For example, the task of modeling a currency trading strategy can be completed by a properly constructed AI machine far faster than a human could ever dream. With so many factors at play, no human brain can contain all of the possibilities.
AI increases self-managed account options:
AI bots are already employed to manage portfolios, allowing for many self-managed investment account options. As with the airport check-in lanes, this means more self-service and fewer human employees. Customer service will still be needed, though much of that can also be handled by bots. Of course, the finance industry also needs high-level strategy people to help teach the robots, monitor their performance, make adjustments, and take the decisions that AI still falls short of comprehending.
Higher profits for the financial industry:
Employment in finance will get leaner, at least until (maybe) the AI revolution creates some new need for human workers. Customers will have more ability to manage their own money, even in employing complex strategies that were once the domain of finance professionals. As expenses for labor decline, the financial sector is likely to become more profitable. With trading platforms becoming easier for the average person to access and navigate, investment activity is likely to increase, supporting markets and generating profits. One question that machines or humans cannot yet answer will remain for many years. What will be the true long-term effect of AI on the world economy?
Phil Shawe is the Co-Founder and Co-CEO of TransPerfect.