The Rise of AI in Banking: Job Displacement vs. Skill Development
Sam Altman, the CEO of OpenAI, has made headlines with his candid acknowledgment that “jobs are definitely going to go away, full stop,” due to advances in artificial intelligence (AI). A recent report warns that up to 200,000 jobs in global banking could vanish within the next few years, especially in roles focused on analysis. The revelation doesn’t stop there; research reveals that over 50% of entry-level banking positions could be jeopardized by generative AI, and nearly 20% of first- and mid-level managerial roles are similarly threatened. For software developers, a Stanford study indicates a nearly 20% decline in jobs from late 2022 to mid-2025, directly linked to AI’s exponential growth.
The Promise of AI: Liberation from Mundane Tasks?
Proponents of AI argue that its implementation allows workers to be freed from monotonous tasks, facilitating a focus on more strategic and higher-value responsibilities. On the surface, this sounds enticing—who wouldn’t want to escape the drudgery of grunt work? However, a pressing question emerges: how does one acquire the skills for these higher-value roles if the initial, foundational experiences are being eliminated?
The Value of Ground-Level Experience
Reflecting on my own journey as a junior investment banker in London, the challenges I faced in early career roles were pivotal. Late nights spent creating financial models, conducting extensive research, and compiling presentations were not merely chores—they were training grounds. These basic tasks honed my understanding of financial dynamics, taught me the intricacies of valuation, and helped develop problem-solving skills. AI can quickly analyze data, but without such groundwork, what about human judgment?
Learning Through Repetition: The Karate Kid Analogy
To illustrate the importance of foundational tasks, consider the original Karate Kid film. Daniel, the protagonist, wishes to learn karate but is met with the seemingly mundane assignments of waxing cars and painting fences. These repetitive actions, though frustrating at first, ultimately equipped him with muscle memory that allowed him to defend himself effectively. This narrative underscores a critical lesson: skillsets are often built through seemingly trivial tasks that foster deeper understanding.
From Tasks to Skills: The Need for Judgment
My tenure as a junior banker taught me that the ability to conduct high-level analyses is not solely derived from software capabilities. It emerges from countless hours of repetitive tasks that cultivate instinct and judgment. As I moved into more senior roles, I relied as much on human intuition shaped by experience as on quantitative analysis.
The Future Workforce: Skills Beyond Automation
In this age of AI, what competencies must future leaders possess? Essential skills will likely encompass judgment, creativity, and emotional intelligence—traits that are not innate but developed through experience. If AI continues to replace foundational roles, businesses may save money now but could face severe deficiencies in leadership and expertise down the line.
Risks of Displacing Junior Roles
Rethinking the elimination of junior roles raises significant concerns: how will organizations replace retiring senior bankers and seasoned programmers? These junior positions serve as critical training grounds, providing opportunities for less experienced workers to make mistakes in controlled environments, learn, and grow. The loss of these roles jeopardizes the pipeline that nurtures future leaders.
Fragility in the Search for Efficiency
Roger Martin, in his book When More Is Not Better, argues that an obsession with efficiency creates fragile economic systems. Such prioritization can marginalize workers, reduce adaptability, and ultimately weaken structural integrity. Building stronger systems requires not just efficiency but also the development of skills that strengthen the workforce.
A Call for Long-Term Thinking
For value investors and forward-thinking leaders, it is vital to look beyond immediate profits. Companies must consider how they are fostering the next generation of leaders who will carry their legacy forward. Sustained attention to workforce development will pay dividends in resilience and adaptability.
The Tool-Making Paradox
As Marshall McLuhan wisely stated, “We become what we behold.” While we should continue to innovate and develop better tools, we must remain vigilant not to lose the foundational skills that brought us here. A focus on advancing technology should not overshadow the importance of nurturing the human elements that enhance its effectiveness.