AI in Financial Services and Banking: Shaping a workforce for the future

AI in financial services and banking is reshaping the way companies within the sector operate and impacting how they hire and manage their workforces. 

As AI becomes more prevalent in banking and finance, it brings both challenges and opportunities through the adjustment of traditional practices to meet the demands of digitisation.

Not too long ago, even a simple process like opening a bank account was arduous and slow. You had to go to the bank during their limited hours, wait in long lines, and fill out many forms by hand. It could take days or even weeks for the bank to approve your account. They needed lots of documents, and sometimes human error would mean mistakes were made, making things even slower.

But now, things have changed. With modern banking, powered by AI and technology, it's much easier to open an account. You can do it online from anywhere, anytime. The process is quicker, and automated systems check your information; this means less waiting and fewer errors.

“AI could simplify the user experience and reduce the complexity of banking operations, making it easier for even non-native speakers to use banking and financial services worldwide.” - Forbes

The potential of AI in Financial Services and Banking

AI's capabilities, such as data analysis, pattern recognition, and machine learning algorithms, have brought about transformative changes in the banking and financial services sector.

Alongside the role AI plays on FinTech skills in demand, here are some further areas where AI has made a significant impact on how financial institutions operate and deliver services to customers:

• Customer Service and Personalisation: AI-powered chatbots and virtual assistants give customers instant help and suggest personalised content, enriching customer interactions. No more waiting on hold being forced to listen to annoying music!
• Risk Assessment and Compliance: AI is like a superhero when it comes to spotting anomalies in real-time, and improving decision-making and regulatory compliance. 
• Fraud Detection and Security: AI algorithms analyse data to identify and prevent fraudulent activities, safeguarding financial transactions.
• Loan and Credit Score Analysis: Getting a loan used to be a hassle, but not anymore. AI automation accelerates credit assessments, expediting loan approvals and ensuring accuracy.

• Predictive Analytics and Investment Strategies: Thanks to AI, we've got smart algorithms helping make investment decisions. AI-driven predictive analytics assist in data-driven investments.
• Algorithmic Trading and Wealth Management: AI algorithms optimise trading strategies and wealth management, maximising returns for clients. 
• Data Analysis and Business Intelligence: AI-driven analytics extract valuable insights from vast data sets, supporting informed decision-making - all you need is good-quality data.  
• Anti-Money Laundering (AML) and Know Your Customer (KYC): AI strengthens AML and KYC procedures by enhancing customer due diligence and risk assessment, keeping an eye out for any suspicious activity. 
• Natural Language Processing (NLP) for Sentiment Analysis: AI uses NLP to analyse customer feedback and market trends, helping companies stay on top of the game.

“To compete successfully and thrive, incumbent banks must become ‘AI-first’ institutions, adopting AI technologies as the foundation for new value propositions and distinctive customer experiences.” - McKinsey

Impact on financial services workforce management

The advent of AI is also revolutionising the way financial services institutions hire and manage their workforces; AI in recruitment is transforming the talent landscape.

As AI has a greater impact on banking operations, they face new challenges and opportunities when it comes to building and managing their workforce.

“The success of the BFSI companies is now measured by their ability to use technology to harness the power of their data to create innovative and personalised products and services.” - Deloitte

Even though AI can simplify and help to efficiently manage processes, it's important to have the right level of human intervention to ensure the tools are functioning to their best capability.

According to the World Economic Forum, 50% of all employees will need reskilling by 2025, as adoption of technology increases. With transforming industry trends, it is vital for companies to stack up a workforce ready to take on the challenges that come with it.

Here are some of the ways in which companies can design their workforce to harness all the benefits that are offered by embracing AI:

1. Hiring AI skill sets
   AI is a relatively new technological development. This means companies that want to utilise it will need to adjust their workforce to ensure they have the right skill sets within their teams; they may want to consider hiring new talent. 

   To design, develop, and implement AI-powered solutions, there is a high demand for Data Scientists, AI specialists, Machine Learning Engineers, and Software Developers. The methods used in traditional hiring practices might fall short when it comes to attracting and retaining such tech talent, so financial organisations will need to update their talent acquisition strategies and internal training programs accordingly.

2. Upskilling and reskilling for an AI-ready workforce 
   As AI automates certain tasks, there is a need to upskill and reskill existing employees to take on more strategic responsibilities.

   With AI being such a surging trend, it is inevitable that your workforce will want to know how they can use technological tools in their role, and how it might impact their daily tasks. A recent survey from PWC indicated: “39% of employees said they’re concerned about not getting sufficient training in digital and technology skills from their employer.”

   If employers are hesitant to provide necessary training for their employees, they will fall behind as technological disruption progresses.

3. Opportunities for boosted productivity 
   AI can streamline and automate mundane processes, resulting in improved efficiency and reduced human error. This shift enables employees to focus on more complex and value-added tasks, leading to a higher quality of service for customers and greater levels of productivity.

   For instance, Bank of America's AI-powered virtual assistant, Erica, has handled over 1.5 million client requests, providing quick and personalised assistance.

4. Ethical and regulatory considerations 
   Using AI in the financial industry needs responsible workforce management. We must have humans overseeing and guiding AI algorithms to be fair, transparent, and follow the rules.

   Institutions should train employees to work with AI and make smart choices when handling sensitive data and dealing with customers. Human oversight remains critical to ensure AI-driven decisions align with industry regulations and ethical standards.

5. Changing job roles and rewriting careers 
   AI is reshaping jobs. Whether that’s through creating new career paths or transforming the responsibilities of traditional roles. 

   Banks must proactively redefine job descriptions and encourage continuous learning to adapt to AI-driven changes. There should be ample encouragement for internal mobility for employees who want to choose new career paths in AI.  

   

In the age of AI, managing the workforce successfully means working together with AI systems. Employees need to know what AI can and can't do, so they can use it well and make decisions based on data. We need to create a culture where everyone learns and collaborates, so we can make the most of AI's power.

The need for human intervention in the age of AI

Using AI involves people being actively engaged. While AI is smart, it is only as effective as the data that it receives. That's where humans come in - they need to keep a close eye on AI to ensure it follows the rules it has been given.

AI handles routine tasks like a pro, but when things get complicated or emotional, human judgement and creativity are still essential.

Customer interactions, for example, often require empathy and understanding that AI may not be able to provide. Human experts play a vital role in interpreting AI-generated results, helping us make sense of the data and turning it into actionable insights.

Moreover, security and privacy are paramount in the age of AI. Humans are responsible for safeguarding sensitive customer information and ensuring that AI systems don't compromise security or violate privacy regulations. By collaborating with AI, humans can tap into the strengths of both, making AI a valuable tool in the banking process.

Together, they can create a more responsible and effective AI-powered future for the banking and financial services industries.