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PCBB Banc Investment Daily October 26, 2016
Banc Investment Daily
October 26, 2016

A Plan For Futuristic Banking

Technology is moving so fast that the latest estimates project in just 9Ys (by 2025) robots will perform close to 50% of jobs in the US. Meanwhile, research by McKinsey indicates 45% of all work activities could be automated today and 60% of jobs could have 30% or more of their activities automated.
To find out if your job or a loan you made may be at risk, consider a few reports we uncovered. The first is from The Economist and it finds the probability of jobs listed at risk of being automated and replaced by robots in the next 20Ys are as follows: bookkeepers (99%), accounting clerks (94%), auditing clerks (94%), retail salespeople (92%), technical writers (89%), real estate sales agents (86%), typists (81%), machinists (65%), commercial pilots (55%), economists (43%), health technologists (40%), actors (37%), firefighters (17%). Next, consider a second research report by Oxford University. It found jobs most at risk are: loan officers (98%), receptionists (96%), paralegals (94%), legal assistants (94%), retail salespeople (92%), taxi drivers and chauffeurs (89%), security guards (84%), cooks (81%), bartenders (77%), and personal financial advisors (58%).
As Artificial Intelligence (AI), digital ecosystems and blockchain innovation continue to grow and find applications in banking and financial institutions, traditional banking jobs like other jobs nationwide could be phased out. For bankers, the Oxford University study that ranked the top 20 jobs likely to be replaced by technology in the coming decades rated loan officers at #17 and bank tellers at #20 on the list of disappearing professions. This may seem difficult to believe, as these jobs are still critically integral in today's economy, but it does make one wonder.
There might be a silver lining to this dark cloud for bankers, however. As the Harvard Business Review notes in its article, "Automation Will Make Us Rethink What a 'Job' Really Is", the perceived role of today's jobs may change as customization and personalization become increasingly important. Using the benefits of automation to determine customer preferences and requirements in real time adds value to the customer as well as the bank. In the article, they use the example of a pilot and a flight attendant and how each of these jobs can be optimized for maximum ROIP (return on improved performance). If you can standardize functions that are legally and operationally needed, you will still need relational and creative functions to be carried out by humans.
As you are planning where to take the bank in the next 5Ys, the pace of technological change is huge and may even be a bit unsettling. However, you may be more prepared than you think. In an Accenture report, bankers conveyed that 55% of the jobs in their institution have a digital element already.
In other words, banks are actively converting practices to position themselves for this fast-moving age. After all, just think back a few years ago and you most likely didn't have online forms and features that are commonplace today.
As you set your path forward, actively consider process automation, review workflow patterns and even work space, as you determine your long-term business strategy. It will keep you competitive, and should deliver cost savings and streamlined efficiency for your bank.