A 2016 report by PwC titled “Financial Services Technology 2020 and Beyond: Embracing Disruption” predicts that advances in robotics and artificial intelligence will start a wave of “reshoring” and localization. While this may make many nuances of people’s daily lives more convenient, the trend may wind up replacing many low-skilled labor roles in the United States.
What Robots Can Do
The reshoring of roles that will be filled by robotics and artificial intelligence may seem unnoticed at first. As the article points out, automated teller machines (ATMs) are robots, and when they were first introduced, many people refused to use them. However, over many years, gradually, people came to see ATMs as objects that could provide better and faster service than a traditional bank teller. This caused a certain amount of trust to develop in consumers. Banking customers have grown to trust and rely upon the consistent, convenient and low-cost service that ATMs provide. This same relationship will likely develop between consumers and other forms of robotics.
Robots in the financial industry are looking far beyond basic bank-teller skill sets. New robots are targeting social and emotional intelligence, natural language processing, logical reasoning, pattern recognition, physical sensors, and more. The new machines will have certain levels of the following three capabilities:
1. Cognition: The robot’s ability to perceive the real world, understand it and plan its future actions based on the data. This is important because it allows the robots to function efficiently in a variety of environments, sometimes-harsh ones.
2. Manipulation: Robots will soon take on a variety of more complex tasks as they get better at manipulating objects in the real world through precise controls and dexterity. This will dramatically increase the amount of uses for a physical robot.
3. Interaction: Support for verbal and non-verbal communication, enabling the robot to learn from humans and collaborate with them, even copying their behavior, means that more and more robots will be able to work directly alongside of humans in a variety of different roles.
In the next few years, these gains may be modest, but a period of exponential growth is expected in the near future.
Reshoring
Over the past two decades or so, companies based in the United States have offshored most repetitive tasks to low labor cost countries such as China, India and Poland. Recently, the relative costs of labor in these countries has been increasing, and the advantages to U.S. companies is dwindling. The advances in robotics and artificial intelligence means that machines are becoming a viable replacement to foreign labor. This is sparking a reshoring movement among U.S. companies. Moreover, as the capabilities of these machines and artificial intelligence increase, costs will be driven down further and the arguments for further reshoring will be plentiful.
Even jobs that seem to require human input, such as product design, fraud prevention and underwriting, will all be affected. However, given the role of robots in the future, it is clear that software engineering expertise will remain in high demand. By the year 2020, it is expected that robots and artificial intelligence will automate a considerable amount of underwriting and investment activity, especially in larger and more mature markets (due to the massive availability of data). In markets that are not as mature and where not enough data exists, machines may not completely replace humans, but they will take over a large portion of human duties, enabling humans to concentrate on assessing and pricing risks in the markets.
Overall, advances in robots and artificial intelligence will drive costs so low as to be almost nonexistent, meaning that all low-level labor will be replaced by reshoring by machines. The lesson for humans is to stay intellectually ahead and prepare to fill high-level skilled roles.
