UK stands to lose eight million jobs from AI, analysis warns


By Irina Anghel / Bloomberg 27 Mar 2024, 03:05 pm

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(March 27): As many as eight million UK workers are at risk of losing their jobs to artificial intelligence (AI) with current government policy, the Institute for Public Policy Research (IPPR) warned.

AI already impacts 11% of tasks done by UK staff, a figure that could rise to almost 60% if firms integrate the technology more deeply, the think tank warned in a report published Wednesday. Part-time, entry level and back-office jobs such as customer service are most at risk but higher-paying jobs will increasingly be affected.

The findings highlight the challenges facing the government as it increasingly bets on AI to cure the UK’s productivity problem. Companies across the board are using AI to drive up efficiency, while the UK Chancellor of the Exchequer announced an £800-million (RM4.77-trillion) investment in technology and AI to boost public-sector output.

“Already existing generative AI could lead to big labour market disruption or it could hugely boost economic growth, either way it is set to be a game changer for millions of us,” said Carsten Jung, senior economist at IPPR, which analysed 22,000 tasks in the UK across all job types.

“A jobs apocalypse is not inevitable — government, employers and unions have the opportunity to make crucial design decisions now that ensure we manage this new technology well. If they don’t act soon, it may be too late.”

In its own report published in November, the government acknowledged that AI was already affecting jobs in the finance and insurance sector. It called for schools and employers to equip workers with the skills they need to adapt.

Government policy will make the difference between job losses and economic growth in the context of AI adoption, the IPPR report said.

Modelling the potential impact of a “second wave” of AI adoption on the jobs market, the IPPR found the technology could add as much as £306 billion per year to the UK economy without any job losses in the best-case scenario, depending on government policy. AI could also deliver wage gains of as much as 30%.

Without any policy changes, researches estimated AI will wipe out eight million jobs with no economic gains.

The UK lags India, the US, Germany, Canada and Israel when it comes to AI skills, separate research from LinkedIn showed. That’s as fewer than half of UK businesses are investing in upskilling their workers, according to Janine Chamberlin, UK country manager for the employment-focused social media platform.

Around 32 of 10,000 LinkedIn members in the UK have AI skills, including machine learning or prompt engineering. Even as that number has doubled since 2016, it’s still “relatively small”, Chamberlin said in an interview in London.

Women and young people could be more at risk to be displaced by AI. Women are disproportionately employed in those tasks that are most impacted by the technology, while companies could post fewer graduate vacancies and choose to rely more on AI for entry-level tasks.

The government should develop an industrial AI strategy to support job transitions and distribution of automation gains across the economy, as opposed to being capture by a few companies, the IPPR said. Recommendations include fiscal incentives to augment rather than displace jobs, regulatory changes, and supporting green jobs that are less prone to automation.

“Investing in skills development within an organisation traditionally has been seen more as a ‘nice to have’, and with the introduction of GenAI, it is now a ‘must have’,” Chamberlin said. “In an organisation, it’s about understanding what are the skills that I have, what are the skills that I need and how am I going to bridge that gap? The same thing applies at country level.”

Bankers will see three-quarters of the workday transformed by AI


By Katherine Doherty / Bloomberg

27 Feb 2024, 08:21 pm

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(Feb 27): Artificial intelligence (AI) is likely to replace or at least lend a hand in tasks that take up almost three-quarters of the time bank employees now spend working.

That’s the conclusion of a new analysis by consultancy Accenture, which said banking has the potential to benefit more from the technology than any other industry. Just 27% of employees’ time currently has a low potential of being transformed, according to the analysis.

“There is a reinvention that is happening across banks, a way for firms to step back and re-evaluate ways of working,” Keri Smith, global banking data and AI lead at Accenture, said in an interview.

As the National Higher Education Fund Corp (PTPTN) enters its 27th year of supporting the higher education needs of Malaysian students, the stakes have never been higher. Its mandate remains: to ensure no Malaysian student who wishes to pursue tertiary education is left behind because of financial constraints.

The release of ChatGPT more than a year ago prompted many firms to boost hiring for AI-related positions and test more uses for generative AI, which can summarise documents, write emails and churn out responses to users’ questions. The world’s biggest banks have been experimenting, spurred by the promise that the technology will boost staffers’ productivity and cut costs.

“Every bank needs to think through their talent strategy, and how to take this technology to scale,” Smith said.

At Citigroup Inc, all 40,000 coders will have the ability to experiment with different AI technologies by the end of March. Analysts at Bank of New York Mellon Corp can wake up two hours later to write their research, because AI technology can create a rough draft and prepare related data for them overnight, chief executive officer Robin Vince said on an earnings call last month.

Banks can boost their productivity by as much as 30% using generative AI over the next three years, according to Accenture.

Bank tellers

Banking at its core is about deposits and lending money, which won’t change, Smith said. Instead, generative AI will either automate or augment work in different ways depending on the roles and tasks. About 60% of the routine tasks performed by bank tellers, whose jobs primarily involve collecting and processing data, could be supported by generative AI, Accenture found.

Loan officer assistants can either retain their role in a smaller existing group, or gain new skills and be moved to a different role elsewhere in the bank, Accenture said.

The consultancy used data from the US Bureau of Labor Statistics and the Occupational Information Network to analyse descriptions of 900 jobs across industries in the US. They then drilled in on 2.7 million banking employees as well as the 170 roles and 3,500 tasks they perform. They also looked at financial information from the largest 150 global banks.

Wall Street Banks Seizing AI to Rewire World of Finance


New York | Deutsche Bank is using artificial intelligence to scan wealthy client portfolios. ING is screening for potential defaulters. Morgan Stanley says its bankers are “experimenting” in a “safe and contained environment”. Meanwhile, JPMorgan is hoovering up talent, advertising for more AI roles than any of its rivals.

The AI revolution is unfolding on Wall Street as wider interest grows in the evolving technology and its likely impact on business. At the most enthusiastic banks, about 40 per cent of all open job roles are for AI-related hires such as data engineers and quants, as well as ethics and governance roles, according to new data from consultancy Evident.

Wall Street banks are using AI “to come up with more tailored hedging solutions” to offer better pricing to clients. AP

JPMorgan is leading the way. The biggest US bank advertised globally for 3651 AI-related roles from February to April, almost double its closest rivals Citigroup and Deutsche Bank, Evident’s data showed.

Eigen Technologies, which helps firms including Goldman Sachs and ING with AI, said inquiries from banks jumped five-fold in the first quarter of 2023 compared to the same period a year ago.

‘AI arms race’


The release of Open AI’s ChatGPT in November 2022 has “made everyone – the board, the CEO and the leadership across the banks – much more aware that this is a game-changer”, said Alexandra Mousavizadeh, Evident’s chief executive and co-founder. “The price for talent is going up,” she said, describing the situation as an “AI arms race”.

The prize is the prospect that everyday tasks will be handled more efficiently and effectively while complex analysis and risk modelling are made easier and faster.

That is particularly tempting in banking, where reams of data underpin increasingly complex investment decisions, despite uncertainties about AI’s eventual capabilities and concerns about how to regulate it.

The process has already begun, according to lawyers advising lenders on technology and regulatory issues. Banks are using AI “to come up with more tailored hedging solutions through instruments like interest rate swaps and equity derivatives, enabling them to offer better pricing to clients”, said Steven Burrows, a director at Fieldfisher and a former derivatives trader.

Deutsche Bank is deploying so-called deep learning to analyse whether international private banking clients are too heavily invested in a particular asset, and match individual customers with suitable funds, bonds or shares. Subject to regulatory compliance, human advisers then pass on AI-generated recommendations.

“I’m a big fan of combining artificial and human intelligence,” said Kirsten-Anne Bremke, global lead on data solutions at Deutsche’s international private bank.

JPMorgan has similar plans. It filed a patent application in May for a ChatGPT-like service to help investors select particular equities, according to a person familiar with the matter who is not authorised to speak publicly. The project is in its early stages.

Morgan Stanley says it is allowing businesses around the firm to run tests “from the bottom up” using open-source large language models – large AI networks trained using massive amounts of text from all over the internet.

In April, the bank said it had patented a model using AI and deep learning to interpret whether communications from the Federal Reserve were hawkish or dovish. The goal is to detect the direction of monetary policy.

“Every business, trading desk and investment group tries to understand it deeply,” Yuriy Nevmyvaka, head of the bank’s machine learning research group, said in an interview. “It’s in a safe and contained environment and it’s all within our walls.”

The push has some urging caution, with concerns over transparency and effectiveness. Many, including billionaire investor Warren Buffett, see the eagerness to embrace complex AI systems as a harbinger of future risks.

“When something can do all kinds of things, I get a little bit worried,” the chairman and chief executive of Berkshire Hathaway said at the company’s annual meeting on May 6. “Because I know we won’t be able to uninvent it.”

Lenders are no strangers to using tech to gain advantage, recruiting data scientists, machine-learning experts and even astrophysicists in recent years. Those investments are now bearing fruit.

Wells Fargo is using large language models to help determine what information clients must report to regulators and how they can improve their business processes.

“It takes away some of the repetitive grunt work and at the same time we are faster on compliance,” said Chintan Mehta, the firm’s chief information officer and head of digital technology and innovation.

French bank BNP Paribas is using chatbots to answer client questions while AI seeks to detect and prevent fraud and money laundering. Similarly, Societe Generale’s Cast uses its computational power to scan for possible misconduct in capital markets. It operates in 26 languages to process 2.5 million hours of conversation and 347 million emails each year, the bank said.

Goldman Sachs analysts estimate that 300 million full-time jobs globally could be exposed to automation by generative AI, according to a report in March. That could include 35 per cent of the business and financial operations industry in the US.

‘Now in a hype cycle’


Bank of America CEO Brian Moynihan said in April that AI could have “extreme benefits” and would help to reduce headcount, while urging caution. “We have to understand how the decisions are made,” he said in an earnings call.

Bankers have a fiduciary duty not to trade on unreliable information. That is an issue as use of AI expands, according to Anne Beaumont, partner at Friedman Kaplan Seiler Adelman & Robbins in New York.

“How do you demonstrate to investors and regulators that you’ve done your duty when you’ve used an output without really knowing what the inputs are?” she said.

Alan Blackwell, professor of interdisciplinary design at Cambridge University’s department of computer science and technology, said a bank would need to trawl through information from a very wide range of public sources to train large language models. “For a respectable bank are you really going to say the same thing to your customers that the LLM has found on Reddit?”

AI is also expensive, both to develop and to run. Estimates show the costs of using large language models to answer a question can be as much as $US14 ($21.50) per query, compared with $US6 via a human lawyer, according to Eigen CEO Lewis Liu. That is because of the extensive cloud computing costs associated with dealing with complex financial documents.

Memories are still fresh of how blockchain and cryptocurrencies failed to deliver the far-reaching changes talked up by their backers.

Firms need to identify areas where AI can genuinely help and draw up a road map with senior executives, as well as training staff and hiring more experts, said Carlo Giovine, a partner at McKinsey who works with lenders and insurers.

They also need to redesign risk frameworks to deal with intellectual property considerations, an uncertain regulatory environment and the danger of so-called AI hallucinations, where the system fabricates convincing-sounding information.

“We are now in the hype cycle, you can see how quickly the industry is moving,” Mr Giovine said. “Some banks have started to realise what’s required to really scale this, but many are still trying to understand.“



Wall Street Tells New High School Graduates to Pick Tech Career Over Finance


Jo Constantz, Bloomberg News

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    , Photographer: Dan Kitwood/Getty Images

(Bloomberg) — Parents of today’s kindergarteners should think about prodding them toward a career in the medical field.

Those are the findings of the latest MLIV Pulse survey with 678 respondents. Nearly 40% said that children currently in elementary school will be best off with a job in health care if they want to avoid being displaced by artificial intelligence. Jobs in the medical fields often involve much more human-to-human interaction, which for now seem hard to replace with generative AI programs like ChatGPT.

Demographic trends may also be supporting the idea that becoming a doctor or a nurse will be a wiser choice for the youngest generation: Economists forecast massive demand for health-care workers as the population ages in the US and around the world.

Investors have a different recommendation for those graduating from high school. Those students will be best off pursuing a career in tech, despite recent layoffs at Meta Platforms Inc., Inc. and Alphabet Inc. Tech savvy is seen as ever more important in a world increasingly influenced by digital platforms, even as some worry AI may pose a threat to some entry level jobs.

“The highest paying jobs were so clearly in the finance sector for two or three decades, and now tech is really competitive with that — they’re kind of neck and neck,” said Andrew Challenger, senior vice president of human-resources consulting firm Challenger, Gray & Christmas Inc. Even with the rise of AI he expects tech and finance to remain among the most lucrative careers for the next 20 or 30 years. “I don’t see that going away,” he said.

Some 52% of 556 professional investors said that technology is the way to go for high school students. Among 122 retail investors, 48% voted for tech. Read full survey results here.

Recent hiring trends support the results. While the current downturn has hit both Big Tech and Silicon Valley startups hard, recruiters in traditional industries — from automakers to the federal government — have rushed to snap up laid-off tech talent and new grads. These days, every company is a tech company, as the saying goes.

Part of the perception that the grass is greener in Silicon Valley may also stem from the way that tech has transformed the inner workings of Wall Street. “There are lots of people that have brilliant financial minds, and yet they can’t put into effect a trading strategy without relying on serious programmers to come in and actually implement it because it’s moved past human beings in some ways,” Challenger said. “I can see why they feel that threat.”

As for the potential impact of AI on Wall Street, only 12% said finance would be the best career option for today’s kindergarteners. While a previous MLIV Pulse survey found that most finance professionals were confident AI won’t replace them in the next three years, that confidence appears to falter over a longer time horizon.

A recent Goldman Sachs Group Inc. report estimated that some 300 million full-time jobs worldwide may soon be affected by AI automation.

Significant layoffs as UBS Group AG absorbs Credit Suisse Group AG, combined with earlier job-cut announcements from Citigroup Inc., Morgan Stanley and Goldman Sachs likely made the respondents lukewarm about careers in finance. The KBW Bank Index is down about 18% year-to-date compared to the S&P 500 up over 7%. The tech-heavy Nasdaq 100 is up about 20%.

First-quarter bank earnings kicked off Friday as JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. reeled in windfalls from higher interest rates that upended smaller lenders last month. But even the big lenders signaled caution, including on the hiring front. While JPMorgan hired more people, the bank plans to keep headcount flat over the rest of the year and expressed caution regarding more buybacks.

Most survey respondents said an undergraduate degree is still worthwhile, despite the considerable investment of time and money. Still, some suggested that going to trade school to become a carpenter, electrician or plumber, jobs which can’t be easily outsourced or automated, might be a path worth pursuing.

MLIV Pulse is a weekly survey of Bloomberg News readers, conducted by Bloomberg’s Markets Live team, which also runs a 24/7 MLIV Blog on the terminal. To subscribe to MLIV Pulse stories, click here.

This week, Bloomberg macro strategists Cameron Crise and Simon Flint ask in the MLIV Pulse survey where the fed funds rate will be at the end of the next easing cycle. Click here to share your views.

–With assistance from Heather Burke.