An exciting and rapidly developing world of artificial intelligence is expected to have a significant impact on the humanity. Large tech corporations believe AI is the future and have expressed plans to go heavy on its exploration and implementation.
AI has already been successfully applied across industries that previously have been human-heavy. Wealth management, investment management, advising, insurance, the practice of law and other spheres are seeing an active intervention of artificial intelligence and will be transforming in response to the opportunities it offers.
Along with tech giants, financial institutions have also been investing funds and manpower on research to find a way to leverage the opportunities that machine learning and other areas of AI present. Bank of America Merrill Lynch has recently published a report with data on the possible impact of AI and robotics development across industries and the global workforce.
According to the report, advances in computing technology, machine learning and user-friendly interfaces will have a significant impact on the labor market and will cost $14 trillion by 2025.
Moreover, by 2025, computerization may cost jobs to close to 140 million employees. As a result, it will generate a $5.2–6.7 trillion direct impact in the form of a higher efficiency and output.
Financial services are one of the leading industries to adopt AI. Robo-advising, automated trading platforms, automated fraud detection, automated underwriting and a range of other services are at a “risk” to be impacted the most. Some estimations predict that application of advanced robotics and AI in financial and legal services could impact as many as 25 million workers in a positive way: it will increase the efficiency by 45–55%. In that case, the total annual economic impact is estimated to hit $0.6–0.8 trillion in 10 years.
There is a segment within the financial services industry that is of a particular “interest" for AI – wealth management. Wealth management is one of the early adopters of one form of AI – robo-advisors. Robo-advisors are expected to have assets worth $255-billion under management by 2018. Although it is a large impact, it will only account for 2% of the total addressable market. By other estimations, the number could reach up to $2.2 trillion by 2020. Successful FinTech players like Betterment, Wealthfront, Nutmeg and others will certainly play a vital role in the adoption of the technology.
Automated trading is also expected to demonstrate a significant growth and adoption. BofA reports that the development of AI-enabled advanced natural language generation has closed the gap between data analysis, storytelling and the ultimate investment decision. As a result, the robo-analysts will evolve and bring higher efficiency to automated trading strategies.
Interestingly, the bank believes that AI is not a threat to humans. Rather, AI complements a human worker and brings new opportunities for employees. However, it doesn’t change the minds of the 43% of financial services industry executives who believe that technology is complicating personal communication rather than facilitating it. In any case, AI is built and taught by humans. Better and smarter machines will always signify great minds of their creators.