A friend was celebrating: his son had graduated and landed a trainee contract with a City bank. High fives, trebles and plenty of fizz all round. Many other families across the country will be celebrating similarly as this summer’s graduates receive their degrees.
As the pal joked about his son being able to care for him in his dotage, the nagging thought was “Yes, but will he really?” The son might have landed the plum berth now, but will it last? Will his role turn out as promised? Will he have a starry career path ahead? Or will he be replaced by AI?
It’s happening. In a recent multimillion-dollar transaction, reports The Wall Street Journal, the process was not run by investment bankers, as is the norm, but by AI.
Private equity giant CVC put a Greek ecommerce business called Skroutz up for sale earlier this year. Those interested were pointed to a link to a data portal that operated like a detailed brochure. A chatbot “analyst” acted as if it were a banker, answering queries about the financial information and due diligence, and pushing the possible buyer towards the management team if they wanted to continue the discussion.
On deals such as this, investment banks usually charge millions in fees. It’s their bread and butter. Here, they would have expected to be advising the owner on the disposal. Instead, they were taken out of the equation completely.
It helped that the co-founder of Skroutz, George Hadjigeorgiou, is something of an AI innovator. It was his suggestion, apparently, that the sale be handled by machine rather than man. Hadjigeorgiou wrote recently: “A new era in software development has begun; bespoke software is here and it’ll be a lot cheaper and far more tailored to a company’s needs than ever.”
Typically, the sounding out of the market on a sale, gauging possible buyers, whetting their appetite while staying strictly truthful, and responding to their queries would require a team of experienced, smart bankers. It’s sensitive, seriously responsible stuff. Big ticket, too, with huge sums at stake. Get it wrong and you drive a potential buyer away; there’s no sale, or a higher price is missed. The client is then furious. Similarly, you can’t say anything that could later come back to haunt you.
This news comes as a report from the Organisation for Economic Cooperation and Development (OECD) finds that London is the most vulnerable city in the world to AI-induced automation, with nearly three in four jobs at risk “now or in the near future”.
The OECD found that three-quarters of London jobs were ‘highly exposed’ to AI (AFP/Getty)
London is ahead, if that is the right word, of all other comparable cities in the world, including New York and the tech capital of San Francisco, and European centres like Paris and Berlin. This is because so many of London’s jobs are located in finance, professional services, and the creative industries.
The OECD found that three-quarters of London jobs were “highly exposed” to AI, with more than half of these workers’ daily tasks able to be performed by a bot.
Here, the Office for Budget Responsibility warns that 3.4 million people in the UK could lose their jobs because of AI in the next 10 years. It says that around 10 per cent of the UK’s workforce “could be exposed to substitution from AI by 2036”.
Another 30 per cent (10.2 million workers), says the OBR, are likely to see their roles complemented by AI within a decade, as the tech develops and carries out their duties.
Already, banks, accountants and law firms are cutting back on their junior intake because their computers can complete the work usually assigned to the graduate recruits.
The UK, the OECD concludes, is in an especially precarious position due to its concentration of white-collar, professional services. Nowhere is that focus more marked than in London.
Sadiq Khan, the mayor of London, has signalled that AI could “usher in a new era of mass unemployment” without proper control. He’s spoken of AI as “a weapon of mass destruction of jobs”.
In his recent annual letter to shareholders, Larry Fink, head of the US financial colossus BlackRock, which speaks for $14 trillion of assets globally, said that AI means we must change our perception of skilled trades.
He said that the average plumber had been portrayed on television as being overweight, with their pants hanging below their waistline, while investment bankers are idolised in drama series like Industry.
“I think what we did was wrong. We really put judgement on so many jobs and so many people who probably should not have gone into banking or media or law, probably should have been great workers with their hands, and we need to now rebalance that approach.”
In the US, he says, after the Second World War, “we built the foundation of education, and we said to all the young people, go to college, go to college, go to college. And we probably overdid it.” Added Fink: “We need to balance that out, and we need to be proud that … a career can be just as strong in these fields of plumbing and electricians.”
My friend is thrilled. His son has done well. Hopefully, he will go on to enjoy a bright future, but given the pace of change, that is far from certain, even when he has secured this promising first step.
Who knows. Very soon, it might not be landing a City graduate position that is regarded as cause for champagne, but getting taken on as an apprentice plumber.