30% of banking jobs to be lost to AI within five years – Vikram Pandit
Vikram Pandit, CEO of the New York-based Orogen Group and former CEO of Citigroup Inc., has said that continuing developments in automated technology could lead to the disappearance of many banking jobs.
Pandit has predicted that as many as 30% of jobs in the sector could be lost to artificial intelligence, as banks continually look to utilise robotics to replace workers and cut costs.
“Everything that happens with artificial intelligence, robotics and natural language - all of that is going to make processes easier,” said Pandit. “It’s going to change the back office.”
Wall street’s top firms have already begun to use machine learning and cloud computing technologies to automate many processes, eliminating the need for workers.
A March 2016 report from Citigroup has already shown a decline in banking jobs, forecasting a similar future outlook for the industry, although the company expects a 30% loss in 10 years, not the five that Pandit has predicted.
Both Pandit and Citigroup’s views about the impact of AI on job losses are in line with that of Tesla’s Elon Musk and Facebook’s Mark Zuckerburg, both of whom have called for the idea of a country-wide universal base income in the US due to the growing realisation that continuing advancements in AI technology will continually displace American jobs.
M&A activity key lever for future tech sector growth
Despite the continuing uncertainty of the pandemic, the tech sector has witnessed soaring dealmaking activity over the past year, rocketing in the second half of 2020, with the last quarter of 2020 a record one for M&A activity, and momentum continuing into 2021.
Dealmaking in tech sector soars in past year
And the latest figures bear this out with the number of technology M&A deals totalling US$208.44bn globally in Q1 2021, according to GlobalData. While the US holds top spot both in volume of deals (1034) and total value (US$140.61bn), Europe ranked next with 649 deals (US$44.49bn) with the UK continuing its reign as Europe’s biggest M&A market with 204 deals.
In particular, megadeals – those valued at US$5bn or more – soared in 2020 representing 59% of all global technology sector deal value in 2020, up from 47% in 2019, according to the latest edition of the EY Technology Global Capital Confidence Barometer.
This tech sector trend towards megadeals is backed up by EY’s CCB data, with 16% of tech sector respondents planning to pursue transformative deals valued at US$5bn or more in the near-term.
While technology deal activity “all but stopped at the beginning of 2020 after fluctuating between historic highs and lows, companies pivoted quickly and tech M&A exploded in the second half of the year”, says Barak Ravid, EY Global TMT Leader for Strategy and Transactions.
M&A activity level for tech sector growth
Looking ahead to the future, technology executives are optimistic, with nearly half (47%) expecting profitability to fully rebound this year, according to CCB data, compared to 23% across all sectors, and with more than half (51%) planning to pursue M&A in the next year in order to sustain growth.
According to Ravid, M&A activity is increasingly becoming a key lever for growth as businesses look to recover.
“To position themselves for future revenue growth, tech companies are now adjusting their M&A strategy to focus more on a target’s business resilience, digital technology alignment and to gain market share through consolidation,” says Ravid.
However, with an increasingly competitive deal market and ongoing geopolitical tensions, the majority of tech execs expect to see more competition in the bidding process for assets over the next year, primarily from private capital.