Artificial intelligence (AI) is changing the finance industry – human labour may not vanish, it will change

Artificial intelligence is changing the financial industry - OP Developer

17.4.2018

AI and its possibilities are not yet understood very well in general, according to anthropologist Paul Hartley of Gemic, a consultancy for business management. Hartley is an anthropologist with a special focus on the interaction of technology and humans.

– Researchers who are familiar with how AI works and what its limitations are, talk about it very differently from what is common in public discussion.

One of the biggest differences, according to Hartley, is that AI is not one single whole. It is a group of AI technologies suited for different purposes.

It is not expected that the financial industry adopts universal AI solutions in the near future that would be able to independently manage extensive sets of tasks. Instead, the aim is to utilise different AI technologies – machine learning, artificial neural networks and methods for data analyses – in smaller tasks or even parts of tasks.

Artificial intelligence is changing the financial industry

One of the most obvious uses is the automation of routine duties. For example, the US bank JPMorgan Chase is utilising AI for the investigation of loan agreements. The bank told news agency Bloomberg that the AI system quickly does the work that lawyers and bank employees annually used to spend 360,000 working hours. This equals the labour input of some 200 people.

Another area of use is automated trading in securities. Stand-alone software is already responsible for a large volume of stock exchange transactions, and large financial services providers add AI components to these systems.

AI is also utilised in customer service. Early examples of this are chatbot helpers on bank websites that can independently answer simple questions. In the future, artificial intelligence will play a larger role as an advisor for bank customers.

– Artificial intelligence may help customers manage their personal finances better. Royal Bank of Canada has done an excellent job in this regard. AI can function in the same way as a bank’s investment or financial advisor that gives customers financial advice. Customers can, however, continuously use an AI system that functions online, without an appointment, Hartley says.

Kaisa Still, Senior Scientist at VTT Technical Research Centre of Finland, agrees with him. Her specialty is innovation management and ecosystems, and she has also researched the fintech sector.

– My bank knows very much about my finances, because it has a lot of data. However, customers do not really have access to this information, Still says.

The bank can, for example, see customers’ card and account transactions. Still explains that AI, combined with the banking system, can for example help to understand one’s spending habits and their consequences in the long run.

Artificial intelligence will be everywhere

AI has interesting connections to regulation, too. Banking regulators follow what effects AI has on the financial sector, but AI also offers companies better possibilities for self-regulation and preventing problems.

An application field, RegTech, has come about for this purpose in the USA. It refers to intelligent systems that help banks fulfil regulatory requirements. AI can, for example, be used to detect fraud. It also helps detect financial risks sooner than currently, which makes it possible to prepare for them better.

– The banks have a lot of data, and AI is especially well suited for processing large masses of data. It is natural that the banks start to utilise AI at an early stage, Still says.

Some years ago, the technology goal of banks was often “mobile first”, but now the strategy is transforming into “artificial intelligence first”. Financial services providers aim to utilise AI in all of their operations.

What will happen to humans during the transformation?

It seems obvious that AI and digitalisation will diminish the number of jobs in the financial industry, because many of the existing duties can be automated in time. However, Paul Hartley of Gemic reminds that the matter is quite multifaceted.

– Artificial intelligence is usually unable to work independently. People are needed to teach and monitor it. AI often does not mean the end of work, but rather that the work changes, Hartley states.

Still agrees.

– For many years now there have been jobs in Silicon Valley where a human guides and trains artificial intelligence. I believe that these kinds of jobs will soon exist in Finland, too.

For many employees in the financial industry, AI is seen as a helper that takes care of the most routine work. Employees monitor and correct the work and teach AI by giving feedback on its conclusions. AI can also teach people to consider perspectives that they otherwise would not have thought of. For a long time to come, however, the most complicated decisions are made by people.

Artificial intelligence raises significant questions

What if AI is developed so far that employees are no longer needed?

As an anthropologist Hartley is not yet convinced that AI completely matching human intelligence, that is, “singularity” is possible - at least not in the near future.

However, it is obvious that AI becomes more intelligent, and then we will face important questions.

– The purpose of technology is to improve the lives of people. Replacing humans in all work does not make life better. That is why, when utilising AI, it is not advisable to proceed with technology at the forefront. It is important to ask why we do something and whether or not it pays off, Hartley states.

He reminds that social change is not guided by technology. It is always people who are at the helm of change. However, when used correctly, Hartley regards AI as a positive force that makes new things possible for people.

Still, likewise, has a positive attitude to change.

– I see digitality and AI as enablers and a very positive thing, both in terms of society and individuals. AI brings growth and productivity. At the same time it is also advisable to openly discuss the negative aspects of AI, because we need to prepare ourselves for them, too.

This article was originally published in op.media