Will automation put jobs at risk in the financial services sector?

Or will firms be able to scale faster and more easily, creating jobs elsewhere?

I recently read an interesting article which highlighted the results of a study by the Office for National Statistics (ONS) and stated that more than a third (39%) of financial services jobs in The City of London were at risk of automation. The jobs most at risk of automation included legal secretaries, tax advice roles, company secretaries and office supervisors followed by financial technicians, investment analysts, business and financial project management professionals and company directors.

The article resonated with me, as we work with clients in the financial services sector to develop custom automation solutions to streamline common business and operational processes. Automation is nothing new in this sector and many of our clients have automated some operational processes already. However, I disagree with the sentiment that jobs will be lost due the automation. There are many benefits to automation, a lower headcount being one, but also reducing a firm’s dependency on key members of staff, which is a big concern for many of our clients and lowering the risk of human error, critical for reconciliation, trade monitoring, trade allocating and reporting, which is where we are seeing widespread automation.

There are few clients who have used automation to make jobs redundant, more commonly using the improved systems to allow them to scale up their operations without increasing headcount.

Some firms also use automation to improve the transparency of their operations to investors, which, whilst not necessarily essential, ticks boxes on investor due diligence questionnaires and leaves a positive impression with investors who are pushing for greater levels of automation, certainly in the hedge fund sector. In the private equity sector too, we are seeing a greater interest for solutions that will capture and disseminate data into other systems, reports or automated workflows.

Many of our clients have legacy systems which generally work well, and they have no desire to replace those with costly, new systems, but want the benefits offered by newer, faster, more complex applications. By building custom automation solutions we can extract information from one system and manipulate it or feed it into another system, to get the desired outcome. With some custom development work our clients can maintain their existing workflows and ways of working, while the automation solution creates a bridge, reducing the impact of modernization on the business but still delivering benefits.

Perhaps surprisingly, there aren’t many off the shelf automation tools available, so custom development is usually called for. Some firms have the skills and manpower to develop that in house, but smaller firms, or those with technology skills shortages can outsource to a firm like ours. As key man dependency is such a big risk, it is also critical that a full skills transfer is done following the implementation of a new automation solution. Our clients often require training for in-house staff, to run alongside the ongoing support and maintenance that we offer, which minimizes their exposure to risk.

However automation is approached, the benefits are clear and extend way beyond reducing headcount and achieving it isn’t always as onerous as you might think.