Brace yourselves for massive job losses in the banking sector. That’s the finding by Bloomberg Intelligence, which indicates that as much as 3% of jobs in the banking sector could be lost in the next three years. The losses would come as global banks increasingly automate various repetitive tasks with artificial intelligence tools.
AI in Banking
Citigroup (C), JPMorgan and Goldman Sachs (GS) are some banking titans increasingly integrating AI solutions to enhance customer service. The integration also helps the banks reduce operational costs. A research note by Citigroup has already shown that AI could displace more jobs across the banking sector than in any other industry.
Back office, middle office and operations are some of the jobs that the banks are targeting as part of the ongoing restructuring due to AI. As bots handle client functions, customer service may change, and know-your-customer responsibilities may also be at risk. Jobs involving routine, repetitive tasks are at a greater risk of being phased out as part of the AI revolution. “However, AI will transform the workforce rather than completely replace them.”
While AI is expected to result in significant job cuts in the financial service sector, there is also the prospect of increased earnings. Banks have the prospect of enjoying a 12% to 17% increase in pretax profits as early as 2027. Banks adding as much as $180 billion into their bottom line would result from artificial intelligence solutions, resulting in increased productivity.
In addition to improved productivity, JPMorgan (JPM) Chief Executive Officer Jamie Dimon expects artificial intelligence to significantly improve workers’ quality of life. Even though the technology will result in significant job losses, the executive expects the technology to address various issues, allowing people to live up to 100 years and avert cancer risk.
Nvidia Warning
Meanwhile, Nvidia (NVDA) vice president of government affairs Ned Finkle has hit out at the outgoing President Joe Biden’s administration over a set of new rules given the export of cutting-edge AI chips. The new regulations covering the transfer of proprietary models impose strict limitations on the global flow of chips needed to power AI models
. The new rules that prevent China from accessing advanced AI technologies via third parties would significantly hurt NVidia’s core business. With about 80% market share in the supply of advanced AI chips, Nvidia is the biggest loser in terms of being prevented from selling some of its chips to Chinese companies.
Finkle insists the new rules are misguided and amount to sweeping overreach. The executive insists the new rules will only undermine America’s leadership in the burgeoning AI landscape. Currently, Nvidia is permitted to sell AI chips to China, but these are scaled-down, modified versions made to meet export regulations in the United States. The US government has strictly prohibited the export of Nvidia’s most cutting-edge AI chips to China since September 2022.
The ongoing discussion about how to prevent China from obtaining the most advanced AI models and chips is one of the few issues that could hinder Nvidia’s progress. Access to thousands or even tens of thousands of chips made to manage AI workloads is necessary for those models to function. In that category, Nvidia’s GPUs are the industry leaders.
