Automation in the Finance Field and Beyond
Will AI affect the modern job economy? If so, what are the potential implications?
From manufacturing to mining, AI has had a significant impact on a wide range of industries. The ubiquitous influence of AI and automation has created many new jobs while simultaneously replacing many others. A 2013 study from Oxford University projected that 47% of American jobs are at risk of becoming replaced and automated by the mid-2030s. This doesn't even account for all the jobs at risk in other industrialized countries such as Germany, Japan, and South Korea. Nevertheless, the effects of automation can even be seen presently. Recently, Amazon, a company that is notorious for automating labor in their warehouses, has begun employing machines that box up customer orders. Amazon has considered installing two of these machines in each of their warehouses. These installations will potentially remove 24 roles from each warehouse. However, can automation go as far as to impact non-labor jobs that require specific skillsets?
The automation of jobs that require certain skillsets has already begun. Advances in neural networks are bringing revolutionary changes to the healthcare industry. When MIT Professor Regina Barzilay was diagnosed with breast cancer, she made it her mission to figure out how the disease could be detected and targeted earlier. Using a collection of 90,000 breast x-rays, Barzilay created software that could detect breast cancer much earlier than any doctor. The software concurrently calculates a patient’s risk of potentially contracting the disease. Barzilay had stated that the software could have recognized her disease two years earlier before she was diagnosed through conventional means. AI in healthcare has advanced so much that certain systems could even predict a person’s health far into the future. Such genomic algorithms could detect factors such as a person’s height, eye color, and susceptibility to certain diseases. Physicians may soon have to begin considering their roles in their patients’ lives due to these developments.
However, how is automation affecting the fields of finance and economics? Over the last decade, automation has slowly crept into the finance field. Due to the massive amount of raw data being flooded in every day, finance teams have found it hard to maintain and keep track of it all. New ERP (Enterprise resource planning) and CRM (Customer relationship management) systems automate data handling and create a more straightforward experience for finance teams. Specifically, ERP systems provide an integrated and updated view of core business processes. This tool can be used to gain a streamlined understanding of on-going processes and easy access to databases. Today ERP systems are expanding to account for business intelligence (BI) while also handling other functions such as sales force automation (SFA). Cloud-based ERP systems make the transition to ERP from accountants even easier. Cloud-based ERP systems are not only affordable but are also hassle-free in regards to implementation.
Regarding the stock market, automated trading leads to a vastly more efficient stock market by altering the volatility dynamic. Machines that serve the purpose of executing buy and sell orders have been in use for decades. However, as these machines became more intelligent and were given additional responsibility, they began to employ different strategies. These strategies consider the value of a company, past trends, and the analysis of different portfolios. Studies suggest that 80 to 90 percent of stock market trades that take place on Wallstreet are carried out by computers pre-programmed to buy and sell with regards to time and price. Nevertheless, there is still much progress to be made until investment can become fully automated. It is estimated that hedge funds which utilize AI for investment decision making only manage around 1–2 percent of the market. Despite this, Jonathan Garforth, a partner in Dentons’ London-based Financial Services practice, believes new algorithms are already being adjusted to analyze more advanced financial information by taking into account important economic patterns and variables such as inflation and unemployment.
Robotic process automation (RPA) uses algorithms, computer software, or “robots” to carry out repetitive and ruled-based tasks such as reentering data, data transfer, report generation, data processing, recording keystrokes archiving. In Singapore and the APAC (Asia-Pacific) region, leading local and international financial institutions have begun incorporating RPA. These RPA initiatives have shown a notable early success with the technology. A study by the International Data Corporation (IDC) of 10 financial service institutions in Asia (ANZ Bank, DBS Bank, OCBC Bank, UOB, and Prudential Life Assurance) has shown that these organizations have shown cost savings and quicker turnarounds times. With directors and regulators across the APAC region supporting the spurring movement, the rate of incorporation of RPA is expected to continue to skyrocket in the region. In fact, the revenue from RPA software is supposed to multiply four-fold. Being worth around USD 214 million in 2018, RPA technology is projected to be worth around USD 800 million in 2022. However, the widespread use of RPA in the APAC region can render millions of jobs unnecessary in the coming years.
In today’s world, many believe that automation aims to make life more convenient for humans. Although this isn’t entirely wrong, we can see a clear correlation when we analyze automation trends. This correlation is between the increased rate of automation and monetary gain or savings. Modern automation aims to help save money by replacing workers. This can have huge implications on the education system and the fields of finance and engineering. With manual labor jobs projected to be replaced at a fast rate in the coming years, these workers must begin specializing in skilled work. This may lead to a surge within the field of engineering. Although automation does affect finance and economics, analysts and economists will continue to be very prevalent and important in this new atmosphere.
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