McKinsey Sees AI Adding Up To $340 Billion To Wall Street Profit (bloomberg.com) 34
Banks using generative artificial intelligence tools could boost their earnings by as much as $340 billion annually through increased productivity, according to consultants hoping to help the industry adapt in this fast-moving area. From a report: This would amount to a 9% to 15% increase in operating profits, according to a McKinsey Global Institute report published Tuesday. Corporate and retail banks have the most to gain, the authors claimed. Generative AI was popularized last year when OpenAI's ChatGPT tool launched, offering users sentences, summaries or even poetry based on simple prompts. The technology is trained on vast quantities of existing material that is used to generate its responses.
Tools like this could eventually take over repetitive tasks from most human workers, according to McKinsey's research on 63 use cases across industries. While the initial efficiencies are set to be within companies -- and the timeframe for adoption is unclear -- the finance sector can expect the AI shift in the future "to be a lot more on the customer facing side," McKinsey senior partner Gokhan Sari said in an interview. Sales and marketing, software engineering, and call center roles are among those most likely to be affected, said senior McKinsey partner Jared Moon. As many as 70% of business activities will have automated parts, which will leave only "a very small proportion" of jobs untouched, Moon added.
Tools like this could eventually take over repetitive tasks from most human workers, according to McKinsey's research on 63 use cases across industries. While the initial efficiencies are set to be within companies -- and the timeframe for adoption is unclear -- the finance sector can expect the AI shift in the future "to be a lot more on the customer facing side," McKinsey senior partner Gokhan Sari said in an interview. Sales and marketing, software engineering, and call center roles are among those most likely to be affected, said senior McKinsey partner Jared Moon. As many as 70% of business activities will have automated parts, which will leave only "a very small proportion" of jobs untouched, Moon added.
Age of abundance requires robots more than AI (Score:2)
AI physically can't do anything without an avatar. That's why we need a golden age of dextrous robots, ones with dextrous hands/grippers.
We need robots that can farm, mine, assemble, and transport.
Re: (Score:2)
This has nothing to do with woke. This is just the Silicon Valley hype machine going all out to push their latest scam with the help of their Wall Street buddies to suck up the dumb money before this scam comes crashing down.
They're already designing the next hyped up scam over drinks on sand hill road for after this one collapses.
AI can fulfill none of the promises nor realize any of the fears they've hung on it.
It's a fucking statistical analysis next-word predictor. Jfc, smh
Re: (Score:3)
If we had known all along the only trick to turn conservatives against corporations was "add minorities" we should have done it along time ago.
4 more DEI seminars and you'll all be socialists.
Re: (Score:2)
C'mon, the woke ship has sailed long ago. Your crowd is now into electing a dictator....go crazy!!!
Re: (Score:1)
hmm -
We had to clarify the role of the VP in electoral college counts why - right because it was a legitimate legal question
Nancy made damn certain security on 1/6 would be inadequate because she wanted an incident. Otherwise several senators and reps would have moved to investigate if election rules were followed, covid or no covid. The media would then have eventually be forced to cover that discussion some people would GASP* conclude Biden and state Democratic Party aparatus might have stole and electi
Like they need more... (Score:2)
Seriously? 340 billion? How many person-hours of financial "industry" labour does that represent? It seems probable that the figure is seriously bloated; but even if we take only 20 percent of it, 68 gigabucks isn't chump change. And that's only in finance - what about when this starts happening in other sectors as well?
This seems like the next step in extreme wealth concentration. This kind of development probably signals the end of lots of C-level people, never mind middle managers and below. I think we'r
Re: (Score:2)
You can become part of the "they" by buying stock in the banks.
Re: (Score:2)
You can become part of the "they" by buying stock in the banks.
He can only become part of "they" if he has a very high net worth and buys stock in the banks. Without the high net worth then his investment, any portion of the returns from higher profits is just a drop in the bucket.
For the vast majority of those without a high net worth already, they would get a higher share of efficiency gains through higher wages and/or lower prices than they would from becoming shareholders. If companies choose higher profits instead of higher wages or lower prices then it is up to t
Re:Like they need more... (Score:5, Interesting)
McKinsey makes money charging executives to tell them they should be doing whatever they are not doing right now.
The report starts with, "Generative AI burst onto the scene in early 2023 and is showing clearly positive results"
Not only do they not provide anything to back their claim, GenAI is clearly NOT showing positive results: the Boston Consulting Group October report on a study with 750+ BCG employees saw 40% productivity increase on bullshit tasks like "pen an inspirational memo" and 19% productivity DECREASE on real world tasks. In its November report, state of California essentially told state employees not to touch GenAI with a 10 foot pole until the state examines potential use cases due to risks.
The rest of the document is all speculation. They are milking the hype for what it's worth, and when the thing crashes they'll just say it is part of the Gartner hype cycle, which is itself somewhere in the Gartner hype cycle.
[1] https://www.bcg.com/publicatio... [bcg.com]
[2] https://www.govops.ca.gov/wp-c... [ca.gov]
Re: (Score:2)
For some reason the California report link is showing 403 Forbidden. Maybe the GenAI VCs invited Newsom for a chat.
Here is a copy:
https://file.io/GGvnNVGtu2IC [file.io]
Re: (Score:2)
That California PDF link is broken, here is another:
https://pdfhost.io/v/VB4QBUjTd... [pdfhost.io]
It is surprisingly strong language from them to say, "Given these risks, the use of GenAI technology should always be evaluated to determine if this tool is necessary and beneficial to solve a problem compared to the status quo."
Re: (Score:2)
Seriously? 340 billion? How many person-hours of financial "industry" labour does that represent?
Productivity increases are based on either greater output or fewer workers. I wonder how much of the estimated $340 billion is based on greater (i.e., currently non-existing) output and how much is based on worker elimination. If an average worker costs $250k/year and the $340 billion is per year, then that amount represents well over 1 million workers.
Private equity companies that focus on leveraged buyouts must be salivating over this new way of worker elimination. Even though those companies were neve
The money goes to banks instead of ... ? (Score:2)
Re:The money goes to banks instead of ... ? (Score:4, Insightful)
There's a point where this turns into a problem, because robots don't buy products.
Re: (Score:2)
I'd say it is the consumers who are losing most if this increased productivity results in increased profits instead of decreased prices. But I mostly agree with McKinsey that there isn't enough free competition in the banking field to force these companies to lower their pricing. I think the fact these companies get away with paying 0.01% interest on savings accounts shows how little competitive pressure they feel.
Re: (Score:3)
while the banks/corporations rake in the profits.
Perhaps, but that's the opposite of what has happened with most technological improvements in the past.
Cars became ubiquitous, something every family can own. Yet most car companies went bankrupt and the remainder have been bailed out multiple times.
Aerospace went from Kitty Hawk to the moon in six decades. Now everyone can afford cheap tickets, but airlines struggle to stay in business.
Semiconductors put a cellphone in everyone's pocket, yet most semiconductor companies went out of business, and most other
Re: (Score:2)
I don't think McKinsey is really talking about "productivity" in the common sense. I think they mean banks can use AI to squeeze more blood out of financial deals. Otherwise their statement makes no sense, and I don't think the bankers will see it as anything other than a way to grease their deals.
Alternative headline (Score:5, Insightful)
"McKinsey pulls another number out of their ass to generate headlines"
For the average person, why does this matter? (Score:1)
For the average person, they see zero gains from Wall Street profits. Instead, they see resources sucked up, more monetization, more revenue streams, more ways to drain one's wallet in a more effective manner. For the average person, AI presents very little good:
* AI is instrumental at shedding jobs and causing a slaughter in the tech sector. This is 2000s-era level stuff where people are now heading to the Amazon warehouse who worked in the Amazon offices. Of course, pundits accuse them of lying sayin
Re: (Score:2)
The average corporate drone, which is middle class America, has a 401k.
What do you think a 401k is? It's their pre-tax dollars invested in these companies.
As far as what AI represents? None of those things. It is the latest go nowhere fad that will not fulfill any of it's proponents promises nor will it bring shout any sort of world changing social disorder to fear.
LLM are nothing but statistical analysis next-word predictors.
You should know that if you've been reading everyone else's posts here since LL
Re: (Score:2)
LLM are nothing but statistical analysis next-word predictors.
Thereby obsoleting other stochastic parrots such as McKinsey consultants, TV preachers, and political speechwriters.
Re: (Score:2)
This is a common presumption but the 401k experiment has been a massive massive failure. Just a way for corporations to get out of responsibility of pension plans, weaken unions, weaken Social Security and generally not designed for the middle class. And now it's constantly used as an excuse why the average American should look the other way on craven profit taking on Wall St. It's theater.
Take out 401k and why should the average American care about $340B more profits?
https://www.pbs.org/wgbh/front... [pbs.org]
ht [demos.org]
Re: (Score:2)
Only half of American adults have a 401k, IRA, or other investment in the stock market. The average balance is about $100k. If the entire US stock market doubled your average American would make about $50k. The vast majority would go to those who are already very wealthy.
What I'd like to see it replace (Score:3)
Let it replace the owners and executives.
Re: (Score:1)
Mmm hmmmm... +1 virtue signal.
Have you ever run a company or started a business? You'll have skynet sending a T100 to your front door to murder you long before you have AI able to run a business.
Gartner says! (Score:3)
This is like one of those ubiquitous Gartner reports where they say, "Industry $currentFad will be an 8 quadzillion dollar industry by $now + 7 years" but no one ever goes back to see how that pretty much never happens.
More robotic nonsense (Score:2)
We already have people who can only read the script in front of them. All you're doing is trading in one robot for another. Surveys have consistently said one of the most frustrating things about trying to get help is the inability to speak to a real person and instead having to go through a computerized menu tree.
Obligatory Last Week Tonight about McKinsey & (Score:4, Interesting)
Nice expose by John Oliver [youtube.com] about the "bright minds" behind these things (McKinsey & Co). It's geo-restricted, so if you are at the wrong side of the planet and have no VPN, this is a shorter clip [youtube.com].
AI-generated? (Score:2)
Later we'll here... (Score:2)
Re: (Score:2)
Profit = market failure. (Score:2)
Remember your economics 101 kids: In a well functioning free market, any profit is incentive for a competitor to come in and offer lower prices.
The obvious corollary is that any large profits are a symptom of market failures, and should be draw serious regulatory scrutiny for exploitative and/or anti-competitive business practices.