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Automated IT services significantly altering financial sector

March 24, 2014

Automation and robotics, two of the most important trends in IT and technology, are typically associated primarily with the manufacturing sector. Workers on assembly lines are being replaced by machines that can do their jobs more efficiently and without the need for breaks. IT jobs are consequently growing in demand in this industry, as businesses need tech-savvy employees to oversee their automation investments.

Writing for Robohub, industry expert Colin Lewis recently asserted that a similar trend is taking place in the finance sector. Banks and other financial institutions are investing in automated IT services and robotics, trimming their staffs and increasing their profits in the process.

Automation and finance
The news source noted that the financial sector as a whole is enjoying record-breaking profits, yet organizations' staffs are shrinking. For example, insurance giant AIG employed 116,000 workers in 2007, but maintained a staff of only 63,000 as of the end of 2012. During this time, its profits rose from $6.2 billion to $6.6 billion, and hit $9 billion in 2013. Lewis suggested that automated technology enabled this development.

Similarly, Citibank reduced its employees from 357,000 workers before the Great Recession to 259,000 at the end of 2012. And Lewis reported that J.P. Morgan recently announced a round of 12,000 to 15,000 job cuts, explaining that this was partly due to "technology that allows greater automation of clerical functions in branches."

The Financial Times further highlighted this issue, pointing to a new startup dedicated to creating "smart" financial machines. Called Warren in honor of Warren Buffett, this system utilizes advanced algorithms to predict securities' reactions to information such as monthly employment reports, an activity usually performed by analysts at financial firms.

"There are several hundred thousand people employed in that capacity. We do it with machines," said Daniel Nadler, founder of the startup, Financial Times reported. "We're not competing with other [tech] providers. We're competing with people."

As financial firms using these tools continue to see their profits grow and expenses diminish, it is all but certain that automated and roboticized IT services will gain greater influence in the sector. Firms need to consider strategies for leveraging these resources in their own operations in order to remain competitive.

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