Artificial Intelligence May Revolutionize the Banking Industry, But It’s Sowing Uncertainty in the Meantime

Banks around the world may shed up to 200,000 jobs before the 2020s draw to a close. The expected staffing reductions are due to artificial intelligence (AI) and its ability to efficiently execute tasks humans currently perform, according to a report from Bloomberg Intelligence. 

The banking jobs that are most at risk of being replaced by AI include back office and middle office positions and roles in operations. While the prospect of being replaced by a machine can cause workers at financial institutions anxiety, executives charged with growing company profit margins may be feeling elated by the potential impact of AI. 

Artificial intelligence can increase a bank’s productivity and, in turn, its financial performance. Bloomberg’s report estimates that banks could see before-tax profits soar by 12% to 17% in 2027, thanks to enhanced productivity fueled by AI.  

Citigroup — the parent company of Citibank — believes AI will replace more jobs in the banking industry than in any other sector.

Approximately 54% of banking jobs can be automated, per Citigroup estimates. 

But AI’s impact on the banking workforce isn’t just speculative doom and gloom. For some, the technology is already making an impact on employment status. 

Singapore’s DBS Group is the holding company of DBS Bank — one of the largest financial institutions in Southeast Asia. The company recently announced that it’s slashing 4,000 temporary jobs as AI services tackle more of the tasks once performed by humans at the bank. Piyush Gupta, CEO of DBS Group, said the company plans to add 1,000 jobs in AI-related roles for a net loss of 3,000 jobs.

“In my 15 years of being a CEO, for the first time, I’m struggling to create jobs,” Gupta said at a recent industry event. “So far, I’ve always had a line of sight to what jobs I can create. This time I’m struggling to say how I will repurpose people to create jobs.”

Gupta’s struggles to justify growing his workforce in light of advances in AI technologies are likely to be shared by many banking leaders as institutions adopt more AI tools.

But, as in DBS Group’s case, AI will also create new jobs. Tony Alvarez is the Senior Vice President of Business and Corporate Development at TreviPay. Alvarez told us that banks still need human capital to manage AI processes.

“The most successful AI integration in banking will follow what I call a ‘self-driving car analogy’, where there’s still someone in the driver’s seat monitoring the instruments, but the technology is doing more of the work,” Alvarez said. “Banks need this crawl-walk-run approach to AI adoption that maintains appropriate oversight while leveraging the technology’s capabilities for greater efficiency.”

Banks that don’t hire in-house AI experts can forge relationships with outside parties that have AI experience and expertise.

“Banks aren’t technology companies at their core — they’re heavily regulated institutions that excel at deploying capital,” Alvarez told us. “This creates a critical need for bank-fintech partnerships in the AI era.”

Alvarez’s comments remind us that banks aren’t self-sustaining entities. To grow, they need customers they can deploy capital to and collect deposits from. And customers are skeptical of the use of AI in banking, particularly when it comes to customer service.

Many businesses use chatbots to carry out customer service interactions on online platforms, and reports reveal that businesses are investing more funds in AI-powered chatbots. But many customers don’t feel confident relying on AI to answer their questions about money matters.

Only 27% of customers trust AI for financial advice and information, according to the results of a recent J.D. Power survey. And only 42% of survey respondents believe that AI will improve their personal finances.

These statistics suggest that financial institutions should consider offering education about the efficacy of their AI tools, including chatbots, before expecting customers to use them.

Anytime a company introduces a relatively new technology — particularly one that’s been demonized for decades by Hollywood — they may experience pushback from customers.

Screenwriters know that films that prey on audience fears in an entertaining way can lead to box office riches. But in reality, AI can help customers access a more fulfilling banking experience. We caught up with Fergal Glynn, Chief Marketing Officer and AI Security Advocate with Mindgard, to learn how.

Though consumers may feel that communicating with an AI banking service will lead to a more detached, impersonal experience, Glynn told us it’s just the opposite.

“It will make your banking experience much more personal,” Glynn said. “Based on your financial preferences in your banking app, AI will provide you with accurate and worthy recommendations, so review and update the data regularly.”

Artificial intelligence also can speed up decisioning times on lending applications, including those for mortgages and credit cards. Glynn told us that some banks in the UK already use AI to automate approvals for loans of up to $100,000.

But AI’s ability to mitigate fraud may be one of the most significant advantages it brings to the banking arena. More than 60 million Americans experienced credit or debit card fraud in 2024, and unauthorized purchases made with fraudulently obtained card data topped $6.2 billion. Glynn told us that AI will make security less of a concern for banks and their customers in the coming years.

“AI systems have the potential to detect the fraud and alert you before it happens,” Glynn said. “Basically, it can analyze the transaction patterns in real time.”

Stakeholders may yet encounter bumps in the road as banks implement more automated systems, but AI is positioned to help financial service providers and their customers access a more prosperous future.