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The Fall of the Luddites
In the early 19th century, a group of weavers in England demanding better wages and protesting widespread unemployment stormed into manufacturing facilities and broke mechanized looms and knitting frames. They would later be known as “Luddites,” which has evolved in the English language as a word for anyone who dislikes technology.
The British government tried to quash the rebellion. Breaking machines warranted the death penalty. The army rounded up the luddites, hanged them or deported them to Australia.
The fear that technology will eliminate jobs hasn’t gone away. Recently, the fear has been magnified by advances in artificial intelligence.
Although traditional AI improves efficiency through automation, prediction and analysis, generative AI can create something new using prompts such as photos, text or computer code. The combined capabilities of both types of AI have led to projections of widespread disruption for jobs that involve repetitive tasks, as well as creative work.
Surveys indicate that AI will eliminate jobs in banking. Bloomberg Intelligence estimates that at least 200,000 jobs at global banks will disappear in the next three to five years. The chief information and technology officers surveyed expected a net 3% of their workforces would be cut. A World Economic Forum report published in January found that 41% of employers worldwide planned to downsize their workforces through the year 2030 because of AI. Forty-seven percent said they would transition people disrupted by AI to other roles within the organization.
“In 2027, banks could see pretax profits 12% to 17% higher than they would otherwise have been — adding as much as $180 billion to their combined bottom line — as AI powers an increase in productivity,” according to Bloomberg Intelligence. In Bank Director’s 2024 Technology Survey, senior executives and board members primarily representing community banks said fraud detection or prevention was the No. 1 use case their institutions were exploring, followed by customer service and back-office efficiencies.
Small and regional banks have begun experimenting with generative AI. At some point, it will be hard for banks to ignore what others are doing, especially if those banks are successful at generating massive efficiencies.
• Naomi Snyder, editor-in-chief for Bank Director.
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