The development of new technologies and their ever-increasing integration in all our activities, from the simplest to the most complex ones, has posed the issue of their impact on the human activities which are linked to the social and economic structure and to the possibility that entire categories of workers and professionals, or even entire industries, might be partially or entirely made redundant and replaces by automatized processes.
This might seem a bit of an overstatement, but in reality, it is not, as human activities will be aided (so reducing the amount of individuals needed to run a process) or outright replaced, and such a process, which started from the automation of simple tasks, will affect increasingly complex tasks.
The financial industry, while being a highly regulated environment with very complex barriers to entry, is as well being impacted by the new technologies, which as an example has started to take on basic support tasks via simple automated chats able to operate via multiple channels and direct the client towards standardised answers or documentation, and then moved to impact on much more complex services, like those provided by the Robo Advisors, able to provide personalised investment portfolio based on the clients data regarding their income, wealth, age, their family composition and financial goals. Robo advisors now manage well over a trillion dollar.
As ChatGPT crashed all records of users’ growth, reaching one million users within a week and 100 million users in under a month, its disruptive potential on a number of human-dominated activities is evident.
Being able to produce reports in a human nuance, but based on an enormous amount of data, we are will beyond the technology driving the basic support which I described above. This new tool is able to create new contents based on the question being asked, providing details and context.
If we consider that it is still in its final test phase, its accuracy is astonishing to say the least.
There is no way to sugar-coat the impact of this technology on anything that entails research and content creation: it will be relevant and in some industries it will be massive. Just imagine the impact it will have on content creation for marketing activities, for the press, for online publications.
As for the financial industry, in my opinion it will change the way the financial advisory is provided and how it is conveyed towards the clients. One of the element to consider is the fact that the financial industry is based on an structural “information asymmetry”, with the financial professional possessing the knowledge which is specific to the industry, having access to data and information which is difficult to access from the public, and the ability to interpret such data and use them to tailor their product and advises to the clients’ needs.
Tools like ChatGPT will allow everyone to get articulate information and reports, in the same way a human could prepare and deliver, to either directly follow or to be used to challenge the industry professional on their advises. So, shall the financial industry professional start looking into a career change right away?
The answer is definitely no.
New technologies will continue to shape and change the way the business is conducted, but looking at what ChatGPT is capable of doing, we have to look at its limitation too. First of all, while based on an enormous amount of data and created through a sophisticated, dedicated algorithm, there is no absolute certainty on the relevance and accuracy of the output.
The intervention of the financial professional is and will be still needed. It will be actually required that the professional grows an amount of knowledge and experience which will allow deep insightfulness and originality in their approach.
A second element to consider is that as we go up in the level of sophistication of the client in terms the size of his wealth and consequent complexity his needs, the more direct relationship and personalised service is required, which will continue to be human dominated for quite a long time. This is confirmed also if we look at the data regarding the use of Robo Advisor and that of the private banking industry, which targets HNWI (High Net Worth Individuals).
Lastly, as mentioned, the financial industry is a heavy regulated environment, and the delivery of any product or advise, especially if personalised to a specific recipient, needs to be created and delivered following all the rules and regulations that have been created in order to protect investors.
There are a couple of point which are not specific to the financial industry, but may definitely affect any instance in which a toll such as ChatGPT will be used: the risk of corruption of the data or the AI source code, due to hardware failure or malicious attacks by hackers, and the risk of native manipulation, which I sensed immediately after knowing about this technology and that is common to all the highly automated processes.
The risk of data corruption or inaccessibility is a serious matter to consider, whose impact increases as the dependability from the automated process rises. As for the risk of manipulation, the contents are created utilising a software infrastructure constituting the environment in which data are classified and then selected using AI algorithm to structure and deliver the contents.
The risk is here that the code itself is created or manipulated to direct the flow in a way in which some data might be given more relevance that other, thus leading to certain kind of results, based on the believes or needs of who controls the environment. This last point is crucial when linked to the financial services and its regulatory constraints, which requires an audit of the technological environment in which it operates and a thorough control of any output in terms of product and/or advise.
To summarise, ChatGPT will impact in a relevant way on the financial service industry, but is unlikely to disrupt its structure, especially when it comes to the more sophisticated services it provides. And, as I asked ChatGPT its “opinion”, it agreed.