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The roles of artificial intelligence and fintechs in the financial sector were up for debate at the World Economic Forum on Tuesday as executives across the banking industry discussed the changing future of banks.
Artificial intelligence could potentially cause job cuts in banking, according to Standard Chartered Bank Group Chief Executive Bill Winters, but employees can also adapt to using AI tools to improve the efficiency of their work.
“The advent of AI, as well as all the automation tools that we’re developing, will displace particular roles,” Winters said during a panel on AI and fintech innovation by the World Economic Forum in Davos, Switzerland this week. “We’re all completely committed to re-skilling the people that are in those roles to the extent that they want to be re-skilled, and most do… Some people will be dislocated and there will be anxieties along the way, but I think the employees will be huge net winners through this.”
But Mary Callahan Erdoes, CEO of J.P. Morgan Asset and Wealth Management, argued AI could be used to grow and retain current workforces.
“Most of the CEOs and companies I see here, and particularly on the panel, are in growth mode,” Erdoes said. “We can keep who we have. We can reinvest in them, and if they go along the journey with us during this very exciting time for the world, they will all be end game winners and the clients, the end user, will have a much, much more powerful experience. Everything will be hyper-personalized to them. It will be, in the banking system, as if they’re walking around with their own CFO right next to them.”
Erdoes said AI is already changing work at her bank.
“We already have 200,000 employees as active users of AI on a daily basis inside of J.P. Morgan,” Erdoes said. “What I can’t show you is the savings that’s created by taking away the no-joy work. First you eliminate that, then you get on to helping the client, giving them more insights, protecting them better, recognizing patterns that the human eye can’t see, being able to stay ahead of the bad guys, and helping all of the CEOs that I see in this audience to help win and move faster.”
The debate was part of a discussion of how various forces, including AI and fintech collaboration and competition, are changing the industry. Bloomberg anchor Joumanna Bercetche moderated the panel.
President and CEO of BNY Robin Vince spoke of using AI to help employees do their jobs.
“We’re an industry of knowledge work, and AI really is an intelligence machine that will ultimately create leverage for humans where we will have agents – digital employees, as we think about them now in our company – who are going to work as part of the workforce doing tasks, creating capabilities, helping us to push forward faster than otherwise we would,” he said.
Vince also spoke of the importance of working with fintechs that are sometimes competitors.
“This is a place where there are new technologies, new capabilities, and they’re infusing into the financial system,” Vince said. “That’s good. We’ve been around for over 240 years, and we’re always innovating. That’s how you get to be old, by being an ongoing innovator. We’re partnering with the new firms that are coming along and also learning from them.”
For example, many digital asset firms run on payment rails built by BNY. “We provide platforms around payments, around collateral, around custody, around issuer services, and many of them use those rails as part of it,” Vince said.
For banks, partnering with fintechs is a balance of adapting to consumer behavior changes and ensuring proper cybersecurity measures, according to Sheikh Bandar Bin Mohammed Bin Saoud Al-Thani, Governor of Qatar Central Bank.
“These days there is an increased competition in the financial sector from non-traditional financial institutions such as fintech, privacy, credit, and telecommunication,” Al-Thani said. “The competition is increasing, which puts pressure on the banks. But I think by investing in innovation, by implementing technology and investing in digital transformation, that will help the banks to grow and to compete in this area. I really suggest that the banks partner with fintech to leverage on their innovation and technology.”
Erdoes emphasized the importance of banks continuing to innovate and adapt to the changing needs of modern consumers.
“The whole reason that banks exist is simply to facilitate the growth of the global economy,” Erdoes said, “and we’re here to serve our clients. Our clients need to go with this economy that we have today in the world. It’s a very exciting time, and us being able to use our balance sheets to help facilitate that growth is exactly what we should be doing.”