Banking jobs bloodbath: Why South Africa isn’t too fussed

A new Citigroup report shows that around half of all banking jobs are at risk of being lost to automation and the advent of artificial intelligence.

However, given the level of automation already present in South Africa’s banking system, experts say the impact won’t be felt as much back home.

The June 2024 research report titled ‘AI in Finance: Bot, Bank & Beyond‘ outlined that “AI will profoundly change the future of finance and money.”

Citigroup estimates that this could potentially drive global banking industry profits to $2 trillion by 2028, a 9% increase over the next five years.

“We believe generative AI (GenAI) has revolutionary potential in financial services because the sector is information-rich [and] data is its raw material,” the group said.

Citi believes that finance will likely face immense changes in terms of market share, employment, and client experience.

“In the medium term, by 2030 or before, AI-powered bots will play an increasing role in banking and finance,” it said.

Resultingly, the research estimates that about 54% of banking jobs have a high potential to be automated, while an additional 12% of roles across the industry could be augmented with the technology.

David Griffiths, Citi’s Chief Technology Officer, said that “the pace of adoption and impact of Gen AI across industries has been astounding as it becomes clear that it has the potential to revolutionize the banking industry and improve profitability.”

Big banks have begun experimenting more with AI, spurred by the promise that it will help them boost staffers’ productivity and cut costs.

Been there, done that

However, Arthur Goldstuck, CEO of technology market research agency World Wide Worx, told Newzroom Afrika that the biggest surprise in the report is that Citigroup is surprised by the numbers.

“The impact of the internet on jobs in the banking sector has been far greater over the last decade or so with the advent of online banking and then app banking the role of the teller has all but disappeared,” said Goldstuck.

He said Citi’s surprise indicates that “the United States is still so far behind the banking technology revolution, which South Africa, by the way, is among the world leaders of,” as seen by the automation of banking and the movement of the consumer from the branch onto the app.

“We [South Africa] already have seen that kind of decimation jobs in the sector or people being moved to different kinds of jobs [so] AI will have a smaller impact on jobs and banking than app and online banking have already had,” said Goldstuck.

Heloise Greeff, an eToro Popular Investor, said that ChatGPT has the potential to greatly aid the investment banking system, as it can process large amounts of data leaving staff to focus on more value-added activities.

“This is a phenomenal AI tool, and rather than being frightened of it, everyone in the financial sector should learn about it and see how they can use it in their own work,” said Greef.

This was echoed by Goldstuck, who said that “as much as AI will automate processes and take over many human roles because it does it better than humans quite frankly, there are many things where the customer is going to require a human to hold their hand.”

The World Wide Worx CEO went further as to say that the boost in quality and efficiency by AI could ultimately benifet jobs. He used the Ford factory in Silverton, Pretoria as an example.

Back in 2009, the company went for a high level of automation. “There was fear of jobs being lost but within 10 years, they more than trebled their workforce, because productivity and quality went up so much that demand… and supply increased, ” said Goldstuck.

“They were able to better supply the market and better satisfy customers so that in turn resulted in massive increase in employment,” he added.

Additionally, Citigroup warned that although it is rife with possibilities, AI-powered chatbots do have some limitations.

An example cited is that in some cases, chatbots struggle to understand slang and they often have difficulty comprehending ambiguous questions.

“Since AI models are known to hallucinate and create information that does not exist, organizations run the risk of AI chatbots going fully autonomous and negatively affecting the business financially or its reputation,” the report said.

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