Artificial intelligence will cut huge chunks out of banking compliance workforce and London high streets might die
Who is going to buy travelcards and pay for cappuccinos when London’s banking compliance workers are automated?
I live in South east London. Not far away from the City. As you expect there are lots of people that work at banks in my local community. You meet bankers when picking your kids up, walking down the high street, or grabbing a flat white.
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I am always interested in what they do at banks on the off chance they might work in IT and be a potential source. But I must admit almost everybody I speak too works in compliance. It is not surprising given the thousands upon thousands of pages of regulations banks must adherer to
The reason I mention this is to highlight the huge number of people that work in compliance at banks and the fact that artificial intelligence could really eat into this.
When we think about artificial intelligence at banks we often picture customer services bots or software integrated into customers’ mobile apps. Yes they will take over customer services but that does not mean displacing thousands of jobs, many of which are high paid.
But behind the scenes AI is increasingly being used to carry out important work in the background helping banks comply with regulations. When AI replaces people in compliance we could really see huge job cuts and cost savings for banks.
This takes me to an article I wrote yesterday about HSBC using software from a big data startup, which includes AI, to help it automate the monitoring of transactions to flush out money laundering. An example of how AI can replace compliance resources.
Lowering costs is becoming more and more important amid the fintech revolution.
At the recent Innovate Finance Global Summit in London Anne Boden, CEO at challenger bank Starling said the big battle in banking involves the cost base rather than innovation. All traditional banks can innovate. They have huge budgets so there is nothing stopping them creating the same fintech services as challengers. They are already doing it. But rather than having hundreds of staff they have tens of thousands. As a result the new players have a huge advantage in terms of cost base.
When John Cryan, who was sacked as CEO at Deutsche bank, said last year that AI will take over a large number of jobs at Deutsche Bank he was probably thinking about all those compliance bods.
But Deutsche bank staff should not think they are safe now he is gone as it seems his bosses at Deutsche bank thought he wasn’t as wieldy with the axe as he suggested. According to a report in This is Money Cryan was forced to quit due concerns that his already-brutal programme of cuts does not go far enough.
But back to my question: Who will be buying coffee and using public transport in London when robots take over compliance roles?