323 impact of ai on the employment market for capital

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3.2.3 Impact of AI on the Employment Market for Capital MarketsAs mentioned above, AI will replace 70,000 jobs in capital markets by 2027, a reduction of 16%. The efficiency of the remaining 84% jobs will increase by 56%, equivalent to a re-duction of 2.9 hours per person per day in the same functional activity. (See Exhibit 13.)
The Boston Consulting Group · China Development Research FoundationMarch 2018The Impact of Artificial Intelligence (AI) on the Financial Job Market29In the capital markets value chain, AI is expected to replace jobs in sales transactions, clearing and settlement. We estimate that 7% of jobs in sales and trading will be cut. AI may even completely replace clearing, settlement, basic reporting and data analysis posi-tions. The core work in the majority number of trader positions of executing transaction instructions will be gradually replaced by AI trading systems. For example, JPMorgan Chase & Co started to implement AI code-named LOXM in 2017 for high-frequency trad-ing in European stocks. The AI clearing system will replace the current clearing and set-tlement positions, liquidating client and free assets more accurately and efficiently.As stated above, AI will not disrupt positions in the capital markets on a large scale, but it will significantly improve the efficiency of all sections on the value chain, especially smart investment decision-making and asset management. In the future, AI will be com-bined with classical economics and investment research theory to enable macroeconomic research through big data analysis to improve efficiency and accuracy. At the same time, investment consultants, including financial management consultants and investment ad-visors will refer to the results of the AI analysis system and improve them based on their own project experience. We estimate that AI will reduce the number of working hours required for investment decision support by 37%.Sources: BCG Model for the Impact of AI on the Employment Market in the Financial Sector by 2027; expert interviews; BCG case experience; BCG analysis.-40%-43%2027 FTE reduction ratioReplaced-5%-37%ReplacedProductR&DAssis-tanceUnder-takerSponsorEquity & debtresearchIndustryresearchResearch on other financial instru-mentsQuanti-tativeanalysisInvest-mentmanage-mentMacroeconomic researchStocktradersBondtradersOther product tradersRiskreviewIssu-ance& under-writingTrans-action clearing opera-tionsDataanalysis40%10%No change55%50%50%45%40%20%ReplacedReplaced50%35%No changeReplacedReplaced0.40.40.60.3Jobs kept to increase efficiency0.1220.00.70.0Improve-ment in efficien-cyJobs kept to increase efficien-cyNo. of cuts (10k)Percentage of FTE cutsInvestmentdecision-makingReporting &data analyticsIssuing securities /primary marketProducts & VASSettlement &custodianshipSales & paymentExhibit 13. Estimated Impact of AI on the Front Office and Middle Office Value Chain in Capital Markets
The Boston Consulting Group · China Development Research FoundationMarch 2018

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