In late 2017, Deutsche Bank’s former chief executive, John Cryan, made a noteworth statement that robots would replace approximately half of the bank’s 98,000 employees in the future. Around the same time, Vikram Pandit, the former CEO of Citigroup, also predicted that artificial intelligence and robotics could eliminate 30% of global banking jobs within five years.
These predictions, however, have not materialized as expected. Deutsche Bank’s workforce has only decreased by 10%, primarily due to routine cost-cutting measures rather than a significant AI revolution. Additionally, employment numbers in the New York securities industry have actually risen by close to 8% between 2017 and 2022.
Nevertheless, there is still optimism about the potential impact of AI in the banking industry, focused more on tangible productivity improvements rather than earlier, more glamorous use cases. HSBC’s robot bank teller, Pepper, for example, was quietly phased out around 2019.
“It’s the most profound opportunity for our industry, and for Deutsche Bank, to drive efficiency and automation, as well as significantly enhance the customer engagement experience,” says Bernd Leukert, Deutsche Bank’s Chief Technology, Data, and Innovation Officer. The bank has ambitious plans to prioritize AI in its strategy.
HSBC shares a similar enthusiasm, despite the retirement of its robot. “I’ve worked in various industries – aerospace, telecommunications, technology – and I genuinely believe that financial services are best suited to leverage AI,” says John Hinshaw, the bank’s Chief Operating Officer. He believes that AI can help consolidate the legacy technology infrastructure and utilize the enormous amount of data available in the banking sector.
Hinshaw also challenges the perception that the regulated environment of financial services prevents the adoption of AI. Instead, he argues that AI can actually facilitate compliance with financial regulations, particularly in combating financial crimes.
Mike Abbott, head of Accenture’s global banking practice, asserts that banks are in the early stages of their AI journeys, but the capacity for large language models is growing rapidly. He notes that the current impact is primarily in areas such as risk management, compliance, and enterprise functions like HR and legal support.
Keri Smith, Accenture’s AI global banking lead, reveals that clients are leveraging AI as a customer acquisition tool to provide personalized services based on AI-generated customer profiles.
Peter Dugas, head of regulatory intelligence at consultancy group Capco, is particularly excited about utilizing AI to analyze global changes in laws and regulations. AI can help institutions identify relevant information from rule books, legislation, regulatory guidance, and enforcement actions.
Capco has already developed a tool that can identify approximately 75% of the records a human could. They have been discussing the potential deployment of this model in regulatory change processes with clients.
Deutsche Bank is using AI to improve code writing efficiency and speed. With thousands of engineers writing code daily, the bank hopes to achieve a double-digit percentage boost in productivity by the end of 2023.
The bank is also experimenting with AI for handling staff IT and HR queries and has future plans for using the technology in client interactions, pending regulatory approval.
In investment banking, Deutsche Bank is integrating AI into credit risk models to consider non-financial factors, particularly those related to climate. It is seen as a decision support tool rather than a decision-making tool, although AI-enhanced models could potentially be used for automated credit decisions with appropriate approvals.
Hinshaw mentions that HSBC is already using AI in an anti-money laundering tool it developed with Google. This tool is now available to the wider financial services industry. AI is also used for predicting ATM cash shortages and conducting regular risk reviews of commercial banking loans in the UK.
Hinshaw also expresses optimism about the potential of quantum computing to enable a significant advancement in AI capabilities. He envisions even greater benefits with a next-generation workforce that is more prepared to embrace AI.
Furthermore, Hinshaw envisions HSBC’s new London headquarters being AI-enhanced. For instance, he envisions a scenario where employees, with their consent, can enter the building without security passes. The AI system recognizes their faces, knows their floor, and even recalls their breakfast preferences to reorder it for them. AI could also assist in identifying and scheduling conference rooms for meetings.
“This embrace of AI is not about eliminating jobs; it’s about doing more with the same number of people and creating a more enjoyable work environment,” Hinshaw concludes.
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