Machine vision and speech recognition give machines cognitive skills, allowing AI to be applied in the real world Image: REUTERS/Yuya Shino
The transformative impact of artificial intelligence (AI) on every industry is indisputable, as is its effect on the labour market. Will AI benefit the labour market over the next decade and beyond, or will it change it and replace humans?
The continuous interaction and integration of data, algorithms and use cases are driving AI development. AI has cut positions, broken the bottleneck of human efficiency, reduced standardized and repetitive work, changed the nature of work and enhanced work efficiency. At the same time, it has created new jobs.
To be more specific, AI technology will change the business world in three aspects: automation, intelligence and creation. In the financial sector, it will make some jobs redundant, while at the same time increasing efficiency and creating jobs.
1. Opportunities and challenges in the new wave of AI
In the new wave of AI, opportunities and challenges exist at the same time. On the positive side, AI could increase automation, support intelligent analysis and decision-making, and create new business models and industries. But AI also carries a series of risks.
In the financial industry, potential risks include micro-financial risk and macro-financial risk. The former could influence the stability of markets, causing turmoil. The latter could trigger risk around market concentration, market loopholes, connection and technology.
Language and vision have been the two major breakthroughs in AI so far, according to research from the BCG Henderson Institute. Machine vision and speech recognition give machines cognitive skills, allowing AI to be applied in real-world contexts, which will change all aspects of society in the future.
The research also reveals that industry users understand AI from three dimensions: data, processes and actions. AI improves workflows by processing structured data as well as unstructured language and image information to deliver new products and services, and provide data or physical feedback.
2. Rebuilding the financial industry value chain: automation, intelligence and innovation
Deep learning and the spread of big data have stimulated the new wave of AI, which has driven breakthroughs in a number of application-layer technologies, fundamentally changing the business world.
This profound change could be defined by three aspects: increasing automation, supporting intelligent analysis and decision-making, and creating new business models and industries.
As AI technology has developed, it has been applied widely to the financial industry and has gradually matured. It has driven profound changes in banking, insurance and capital markets. BCG has worked with industry experts to analyze how AI is driving automation, smart analysis and decision-making, uncovering new models and new products. We have provided examples of important types of AI applications in various industries.
3. Restructuring the financial labour market: replacement, improvement and creation
Based on the applications of AI in the different business value chains of the financial sector, we see three major impacts that AI is having on the financial job market: job cuts, increased efficiency and job creation. Of these three areas, job cuts and increased efficiency will impact existing positions, while job creation reflects the incremental potential impact of AI on the job market.
The further distinction between job cuts and increased efficiency is based on a judgment as to whether the manual work replaced by AI can be considered the core value-creating activity of the position. That is to say, if the core value of a job post can be created by AI rather than by manual work, then the position can be eliminated due to AI. If AI cannot replace the core value-creation activity of a position – in other words it is still dependent on manual work and AI is only playing an auxiliary role for the completion of non-core tasks – then this is considered an increase in efficiency.
We estimate that by 2027, 23% of the jobs in China’s financial sector will either be cut by AI or will be transformed into new positions. The remaining 77% of jobs will not be replaced, but the efficiency of these positions will increase. The jobs that will be replaced by AI mainly consist of standardized and repetitive tasks. We estimate that by 2027, about 2.3 million people will be affected – 23% of the total workforce in the financial sector. The remaining 7.6 million people – those who need to solve complex problems and respond to emotional interactions or random changes in the environment – will not be replaced by AI. Instead, they will be able to increase their working efficiency by using AI.
4. Changes in employment structure in the AI era: shifting demand structure and diverse skill requirements
Changes in employment demand and talent requirements in the AI era have been more evident in developed countries and leading companies. Taking the US as an example, the technological changes over the past few decades – particularly the rapid growth of computer processing speed and capabilities, and the automation of everyday tasks – have resulted in a decrease in the time spent on manual and cognitive tasks, especially by production line and operations workers and office clerks. At the same time, demand has continued to grow for professional service talent, with an emphasis on communications, logic and creation, and technical talent dealing with computer technologies.
In China, we have also observed similar changes in employment demand and talent requirements. In this wave of technological progress, posts relying on creativity and communications will continue to grow. At present, AI technology in China is still in an introductory stage, so changes in employment demand in the AI field are limited, and are mainly reflected in a demand for basic technical talent. From a recruitment perspective, companies are placing greater emphasis on technical skills, particularly ability in basic AI.
As AI technology develops, the demand for talent is also changing. AI is gradually replacing manual labour in repetitive, highly standardized job activities that can be carried out using computer software. Therefore demand for these positions has been in decline. However, there are some positions that will not be replaced by AI over the next decade.
The first change will be an increased demand for talents who are skilled in AI technologies, both on a technical and application level, but who also have soft skills. In addition to generating demand for talent, AI will also affect the overall labour market. Activities that can be replaced by artificial intelligence are those that can be automated. From this aspect, developments in AI will amplify the soft skills of talented people and make them applicable to a broader range of industries. It will also increase requirements for creativity, emotional communication and complex problem-solving.
In summary, although the advent of the AI age creates a “struggle” between humans and machines and replaces jobs, it also creates opportunities for new talents who can create, apply and optimize AI technologies. It requires workers with strong communications abilities who can apply their high-level technical achievements to production and daily life.
Article via WeForum.org