AI ‘could wipe out’ 30% of banking jobs in next five years
Former Citigroup chief executive says robotics is ‘going to change the back office’
The Irish Financial Services Centre in Dublin. Photograph: Aidan Crawley
Artificial intelligence and robotics reduce the need for staff in roles such as back-office functions, Mr Pandit (60) said on Wednesday in an interview with Bloomberg Television’s Haslinda Amin in Singapore.
He’s now chief executive officer of Orogen Group, an investment firm that he co-founded last year.
“Everything that happens with artificial intelligence, robotics and natural language - all of that is going to make processes easier,” said Mr Pandit, who was Citigroup’s chief executive officer from 2007 to 2012. “It’s going to change the back office.”
Wall Street’s biggest firms are using technologies including machine learning and cloud computing to automate their operations, forcing many employees to adapt or find new positions.
Bank of America’s chief operating officer Tom Montag said in June the firm will keep cutting costs by finding more ways technology can replace people.
While Mr Pandit’s forecast for job losses is in step with one made by Citigroup last year, his timeline is more aggressive. In a March 2016 report, the lender estimated a 30 per cent reduction between 2015 and 2025, mainly due to automation in retail banking.
That would see full-time jobs drop by 770,000 in the US and by about 1 million in Europe, Citigroup said.
JPMorgan Chase chief executive Jamie Dimon cautioned in June against overreacting to the impact of technology on jobs.
While the bank is using technology to reduce costs, that helps create other opportunities, Mr Dimon said in an interview published on LinkedIn. He predicted employee numbers at his firm will continue to rise as it hires more technology workers.
The banking industry is becoming “enormously competitive,” Mr Pandit said, adding that he foresees the emergence of “specialist providers” as well as consolidation in the industry.
“I see a banking world going from large financial institutions to one that’s a little bit more decentralised,” he said.
Since leaving the firm, Mr Pandit has invested in non-bank financial start ups such as student-loan venture CommonBond and home equity finance firm Point Digital Finance.
He formed New York-based Orogen last year with investment firm Atairos Group to acquire stakes in mature financial-services companies.